Many people have an underfunded or nonexistent emergency fund. Restructure your thinking about emergency funds with the following tips about the importance of savings and the proper mindset to be in.
At the financial blog Get Rich Slowly Gail Vaz-Oxlade, a financial writer and host of the show 'Til Debt Do Us Part, has quite a few things to say about emergency funds and the sad state many people find their accounts in. Among them, a topic we recently discussed here, focusing on debt repayment to the exclusion of building your emergency fund. She goes on to list a variety of reasons people don't establish an emergency fund and their justifications for doing so, but ultimately she arrives at this conclusion:
Perhaps the problem with the whole emergency fund thing is that people don't like to think they'll have to deal with "emergencies." It's not unlike the folks who won't make a Will because they don't want to contemplate their demise, or who won't buy disability insurance because they can't imagine becoming disabled.
Maybe we're just calling it by the wrong name. The whole idea of having to deal with "emergencies" can be a real downer. Maybe what we need is nomenclature that sounds far more proactive and positive. We'll stop predicting disaster and instead focus on the fact that when you have money at the ready, you also have ways and means to deal with whatever life pitches at you.
She goes on to suggest some solid advice we've recommended here before: automate your finances to redirect money to your emergency fund and trim your budget by cutting out excessive indulgences.
Subscribe to premium cable? Go out for a drink with your friends after work? Buy your lunch at work? Pick up your favourite "stuff" whenever it's on sale even though you already have 30 pairs of shoes, white shirts, handbags, DVDs, name your vice here. How quickly could you build your Ways-and-Means Fund by focusing on being safe as opposed to being satiated?
Most of us can answer the last question with an honest "A lot faster than I am now." If you have some tips and tricks of building an emergency fund or squirreling away money for not-quite-an-emergency moments, sound off in the comments below.