Create Your Emergency Fund

by Cindy S. Morus

Too often, irregular occurring expenses get left out of our financial equation. We choose not to think about the brakes that are getting spongy or the plumbing that's beginning to make strange noises. Planning and saving for those events can help prevent an ordinary occurrence from turning into a crisis.

 

Here are some steps to help you get started on your Emergency Fund:

Identify your irregular expenses. Take an inventory of those variable expenses that occur throughout the year like property taxes, insurance premiums, vacations, car tune-ups, holidays and birthdays.

 

Write the anticipated amounts on a calendar. In many cases, you will know when expenses are due to occur. In others, you won't. But you know that sooner or later a car will have problems or an appliance will break down.

 

Include money in your monthly spending plan for non-monthly expenses. If your car insurance, for example, is due in May, set aside a small portion each month starting in February. That way, when May rolls around you can transfer the expense to your spending plan and have money available to pay it.

 

You may think you don't have any "extra" money during the month to set aside, but by tracking your expenses, you may discover areas where you can trim your monthly spending with only small sacrifices.

 

The important thing is to start today. It may be discouraging at first if you find that you don't have enough money to fully fund your Emergency Fund, but you'll begin to succeed the minute you start the process.