It never rains, but it pours, y’all. That’s all I could say to console my sobbing self after I accidentally broke our extra large, industrial-sized lawn mower mid-way through mowing our half-acre yard earlier this summer. My husband, ever the pragmatist, reminded me that this is why we have emergency cash and a savings account as part of our preparedness plan.
It didn’t help me feel better, but it did help get the mower fixed. Oh, and two weeks later? My husband broke it, too. Thankfully, he’d just spent time fixing it, so it was a lot easier and faster the second time.
How to save up enough emergency cash
Saving money is hard. It’s even harder when you’re living paycheck to paycheck (as most people are). But the only way to break that cycle is to make a small sacrifice today so that tomorrow can be a little bit better.
Whatever you and your family decide to do, map out a plan to a realistic rainy-day fund. And just in case you aren’t sure where to start, the NPR recommends you start with $400.
Maybe it means skipping something this week so that you can put that $5 aside for your emergency cash fund. Or maybe it means finding a way to earn an extra $5. Perhaps it means coupons or picking up coins dropped in parking lots or taking water bottles to a recycling center. You may need to get creative in what you do in order to save that money, especially if money is already tight.
Here are a few ways we’ve saved money for our emergency funds:
- Selling items we no longer need at yard sales or on eBay
- Skipping eating out for a month and putting that money into savings
- Participating in employee stock purchase plans and putting proceeds into savings
- Putting credit card cash-back rewards into our emergency savings
Credit cards can be another form of emergency funds – but they come with a big, fat IF
Full disclosure: yes, we’ve used our credit cards to cover some emergencies. HOWEVER. We pay those credit cards off every week. Which means that even though we may swipe a card to cover buying parts for that broken lawn mower, we’re only able to do that because we’ve got the cash saved up in our bank account to pay off the credit card.
So in a sense, it’s like we’re paying cash. We’re just earning cash back (or points) by adding in the extra step of using our credit card (which gets immediately paid off).
If you do use your credit card:
- Do you have enough credit to do so?
- And do you have the means to pay it back quickly (so you can avoid paying interest)?
In other words, a credit card can be considered in an emergency – but only if it’s used responsibly.
How to store that emergency cash
Now that you’ve saved up that initial $400 in emergency funds, it’s time to look at how you should store it.
Emergency funds in a separate savings account
In some instances, it may be worthwhile to put that money in the bank.
- If impulse control is an issue, you may not want cash on hand.
- If you already have a smaller emergency fund, put a secondary emergency fund into a savings account or into some other account that can earn interest.
We actually have two savings accounts. The first one we use to manage our cash envelope system and is connected to our checking account. In fact, they’re at the same credit union. The second savings account has our emergency funds in it and is at a different banking institution.
It’s an online-only institution, which means it’s harder for us to dip into that savings account. Which is kind of the point, because that’s our emergency money!
Keeping cash on hand for emergencies
Now, in absolutely every good “we’ve gotta survive the apocalypse” book I’ve ever read, it points out an important fact: sometimes you’ve got to have cash. And in the unlikely scenario that the zombies show up, eat all of the credit card readers, and the stores still happen to have food on their shelves, you’ll thank your lucky stars that you followed my recommendation to have some emergency cash on hand.
That or you had a good giggle while still seeing that it can, in some instances, be smart to keep cash on hand in case of emergencies.
How much will be up to you, as it’s got to be an amount that’s not going to spike your anxiety should it get temporarily misplaced, lost, or stolen. And however much that is, it should be stored in useful increments in a safe, nondescript location.
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Because, y’all, you don’t want people knowing how much cash you’ve got on hand – or where it is. Otherwise, it’s gonna walk off. That’s why you want to hide it with this Hairbrush with Hidden Storage Compartment from Amazon – then use this Book Safe (with Combination Lock, also from Amazon) as a great decoy.
Or use the hairbrush as your decoy and really use the book safe.
If you’d rather use actual safes, here are some great ideas from Amazon:
- Got some documents you need to protect? Keep those and cash safe in this amazing Fireproof document bag!
- Need to store more items? Then you’re going to want to start by putting those valuables into this awesome fire resistant chest.
That way, you’ll have your emergency funds for when you need them – and you won’t have to worry.