Fund times: How to start an emergency fund

The term “emergency fund” isn’t something that sounds, at first glance, all that appealing.

For starters, the word “emergency” doesn’t really do a whole lot of the average person given that they tend not to want to think about something, an event specifically, that elicits panic that courses through their entire body at a moment’s notice.

“Fund” isn’t too bad since it’s pretty close to the word “fun” but really is mostly centered on money, a topic that few want to think about or discuss at any given moment in time.

But thinking or talking about an “emergency fund” is of the utmost important because without one, you’re never going to feel that sense of ease about money in general or the thought of something happening in life and being totally unprepared to pay for it.

Those who have money set aside live by two very golden financial rules: they have at minimum three months of salary in the bank at all times and make it a point to save about, again at minimum, five percent of their monthly earnings. That money, in turn, is automatically put into a savings account or the said emergency fund.

Paying yourself isn’t uncommon when trying to establish an emergency fund, and that practice is one of two that separates having an emergency fund and not. The Catch 22 in this discussion is that most argue they can’t afford to set aside five or 10 percent of their pay each month because they need that money to pay bills.

And in that breath is when the second point resonates all too loudly: budgeting.

The only way you can save money and in essence build an emergency fund through paying yourself on a monthly basis is through budgeting. You have to take into account the idea that if you’re living paycheck to paycheck or if your expenses match or, worse yet, are more than your income that you need to start cutting or at the very least replacing some of your expenses with lesser alternatives.

Cable bills go away in favor streaming, cell phone plans become talk and pay as you go or you complete go without new clothes every season or a few summer vacations just to prove a point that saving trumps all. And as much as those cuts will sting, they’ll be a staunch reminder of just how important saving money is, not to mention that emergency fund taking on a whole new meaning when you actually have one to speak of now.