NDSU Extension - Sargent County


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About Your Emergency Fund

About Your Emergency Fund


One of the many things I learned by having a pre-term baby was how important it is to be moving in the right direction, even if the movement is in tiny increments.  Yes, my husband and I rejoiced if our son’s daily weight gain in the NICU was even just a quarter ounce to a half ounce, because that was infinitely better than if he went backward with his weight.

The same is true for saving toward a first goal of establishing an emergency fund.  It is much better to move toward the goal, even if in small increments, rather than to not try at all.

It helps to think of an emergency fund as being a necessity.  It isn’t that the amount of money you save to put toward the emergency fund each week, two weeks, or month matters so much.  The important thing is making the commitment so that contributing to your emergency savings becomes a habit. This single act moves you toward a healthier financial future.

Nobody can predict the future, but we all know that unplanned expenses will arise. It makes sense to put aside money for those occasions, even if you don’t yet know what the money will be used for. Establish guidelines for yourself as to how the reserved money can be used and how the fund will be replenished if and when you dip into it.

Smart About Money (SAM), a program of the National Endowment for Financial Education, recommends building an emergency fund of at least $500, and to ultimately aim at a balance that is equal to three months or more of living expenses.

If you dip into the emergency fund, be intentional and disciplined about replacing any amount that is used.  SAM recommends thinking of the fund as a glass, and thinking of the money in the fund as water in the glass.  Any time you take a sip or a gulp of water from the glass, you need to refill it, since we never know when the next emergency may occur. 

Smart About Money (SAM) is a trustworthy, dependable, source of unbiased information.  It is one of several programs offered by the National Endowment for Financial Education (NEFE), a nonprofit foundation.  NEFE is dedicated to providing non-commercial, unbiased resources, finance courses, articles, calculators and tips to help people make positive and sound decisions to reach their financial goals and manage money through life's ups and downs.

Source: Smart About Money - My Emergency Fund Plan

Photo Source: https://pixabay.com/vectors/savings-box-pig-piggy-bank-money-161876/  (downloaded 6/2/20)

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