Are you prepared for a financial emergency?
It’s not a matter of if you’ll experience a financial emergency, but when. They happen all the time and range from a few hundred dollars to a few thousand.
So that brings us to the next question. How much money do have saved up for emergencies?
In January, 2017, Bankrate reported that 57% of Americans don’t have enough cash to cover an unexpected expense of $500. Unfortunately it’s pretty easy for unexpected expenses to exceed $500.
Let’s take a look at a few examples of unexpected expenses that could throw a wrench into your finances and budget.
1. Major Medical Expenses: surgery and medication can cost thousands of dollars. Plus any time you spend in the hospital can get crazy expensive!
2. Household Emergencies: as a new homeowner, I’ve experienced a bit of this first hand. Major appliances can break at any time, and they aren’t cheap to replace. Then there’s always the water heater, the furnace, roof, or any amount of pipes that could burst and cause thousands of dollars worth of damage.
3. Auto Repairs: sooner or later, your vehicle is going to have issues. Even if you take pristine care of your car, something will eventually break. Or else, there’s always the possibility of getting into an accident.
4. Pet Emergencies: your furry friends are adorable and cute. They’re also incredibly curious and eat things they shouldn’t. A friend’s dog ate a spool of thread that required surgery to remove. A lot of people don’t have pet insurance (I know we don’t), which means loads of money to return your pet to their normal cheery self.
5. Unexpected Unemployment: hopefully this never happens to you. But the truth is, it’s not uncommon to lose your job with no backup plan. Unemployment payments definitely help, but it’s not a long term solution. Without a stockpile of savings, you could be in big trouble!
6. Kids: almost forgot this one. Kids are a walking potential emergency. They break arms, get sick, need braces, and inherit bad eyesight from their parents. We have a kid on the way and I’m already praying that it gets my teeth and my wife’s eyes.
These are just a few examples, and all of them could send you spiraling into the despair and mountains of debt. Wouldn’t it be nice if there was a better way? Don’t worry, there is. All you need is an emergency fund.
Creating an Emergency Fund Gives You Room to Breathe
When we were dating, Jenna and I started reading a lot from Dave Ramsey. He recommends saving up at least $1,000 as an emergency fund. He calls this Baby Step 1.
The idea is to help offset the costs of unexpected expenses like the ones above without affecting your monthly budget or relying on a credit card. Eventually he suggests saving up 3-6 months of expenses to cover bigger financial emergencies that might crop up. However, if you don’t have anything, $1,000 is a great place to start.
If you’re one major expense away from a financial disaster, an emergency fund can relieve some stress and give you peace of mind. Sometimes worrying about emergencies is just as bad as the emergency itself. Take away the stress and worry with an emergency fund!
There are so many ways to do this. You can sell possessions, stop going out to eat for a few months, or start a second job. I’m not going to go into a lot of detail on HOW to get started just now, but Trent over at The Simple Dollar has an awesome article for saving your first $1,000. You can also check out my article on decluttering.
How Our Emergency Fund Saved Our Finances
Like I said, Jenna and I read a lot of Dave Ramsey when we were dating. As a result, we both saved up $1,000 in our separate savings accounts to act as our emergency funds. Then when we got married, we combined that into a giant emergency fund.
And because we are pretty big planners, we added $2,000 more from our wedding gifts just in case a baby Griffin found it’s way into the picture. That way we would be ready (or more ready I guess) for any hospital bills or “Holy Cow We’re Having a Baby” expenses.
Altogether, we entered marriage with $4,000 stashed away for emergencies. We felt really prepared if something crazy happened.
Surprise! Something Crazy Happened, More Than Once
Last summer my car started making weird clunking noises. The culprit was the front driver’s side tire. The good news, it only happened when I turned left. The bad news, it made me nervous as all get out!
Every time I drove I white knuckled the steering wheel, praying the tire wouldn’t go flying off in the middle of an intersection.

Thankfully that never happened and I got it into the shop….eventually. We’ve found a car shop that we LOVE! Let me clarify, we don’t love going there, but we love the service they provide. They are really upfront with us, and never recommend spending money unless they believe it’s an immediate problem.
A few hours after dropping off the car we got the call. After a couple minutes of car parts jargon that I vaguely understood, he hit me with the price. The cost was almost $1,000 to fix it all. AHHHH!!!
Our Emergency Fund Saved Our Butts!
Nobody wants to pay $1,000 for car repairs. It downright sucks. However, we had a $4,000 emergency fund sitting around for exactly this reason! This major expense didn’t affect our monthly budget at all!
We gave him the OK and took the money out of our emergency fund to pay the bill in one lump sum. Then we set off to replenish our account back to $4,000.
We Majorly Miscalculated Our Taxes
Our next big blunder came almost a year later. It was this past February when we met with our accountant to get our taxes done.
I spent most of my life trying to maximize my tax return. I mean, who doesn’t like getting a monster check in the mail?! It was the only time I felt like Scrooge McDuck swimming around in money.
However, recently I’ve changed my strategy. Instead of getting the money back all at once, I wanted to get more back in each of my paychecks. We are big budgeters, and when we were paying off our student loans every dollar was super important! It made more sense for us maximize our paychecks each month than get a big tax return.
I made a minor tweak to my tax withholding, going from 0 to 1. Again, the goal was to put more money in each paycheck and get a smaller tax return. Our goal worked awesome, until it came to tax time.
Instead of getting a tax return, we owed over $900 in taxes. Our jaws literally dropped. I’m sure we looked like a cartoon character with our mouths gaping open. My mom would’ve for sure told me to mind my manners.

Again, this sucked! We walked in expecting a couple hundred bucks back and ended up owing $900. What a punch in the gut.
Luckily our emergency fund flew in again singing, “HERE I COME TO SAVE THE DAY!!!”. At least that’s how I picture it in my head, cape and all. We transferred the money and wrote the checks. No major damage or stress. Our current goals just got delayed a bit.
Our Dog is an Idiot. Don’t Worry, We Still Love Him
In June we got a new dog named Gregg. We adopted him from a shelter, and fell in love immediately. He’s a big, happy dufus.
A couple weeks ago I brought Gregg and our other dog Sadie out in the field next to our house to run around and play. A couple other dogs came to play too, which is normally totally fine. This time was different.
Gregg got really agitated and bit our neighbors dog. After breaking them up, all seemed fine. I brought our dogs in and went back out to check with my neighbor to see how his pup was doing. Again, he seemed fine.
A couple hours later my neighbor text me a couple pictures and informed us he was taking him in to get stitches. We offered to take the bill, which was $440. Ouch. Our happy go lucky dog cost us a big chunk of cash and now we have to constantly be wary of him around other dogs.
What if We Didn’t Have an Emergency Fund?
So far this last year has been a bit rough on the emergency fund. All of these situations were less than ideal, by a long shot. But it makes me wonder, what would we have done without an emergency fund?
Each of these emergencies could’ve been catastrophic! It makes it easy to see how people get into credit card debt. When bills are due and there’s no money, what other options are there? That’s why having an emergency fund is so important.
One Last Story
About a year ago, my sister and her husband started following Dave Ramsey steps to get out of debt and turn their finances around. The good news is they are ROCKING IT!!!
Last summer they built up an emergency fund and started destroying their debt. Unfortunately they had an emergency. Here’s what she has to say about emergency funds:
“Having an emergency fund sure takes the stress out of things when stuff happens. We had an emergency fund and this past summer between the pump for our well and my husband hitting a deer cost us nearly $3500. We were easily able to pay for this with the emergency fund and frugal lifestyle and have already replenished our emergency fund.”
She just told me they had to dip into it again for major dental work for her almost 6 year old. Emergency fund to the rescue again!
When Are You Starting Your Emergency Fund?
If you’re afraid of unexpected expenses busting your budget, it might be time to start your own emergency fund. The best part is the peace of mind it provides when emergencies pop up.
Let Me Know in the Comments
How has an emergency fund saved your butt? How could an emergency fund change your life?
Got an oil change a few days ago and expected to just pay my $35 and go home. The guy instead tells me I need to change all my tires. Not the best feeling in the world, but not the worst either…knowing that I have an emergency fund. You never really want to use them, but that’s what they’re for! Thanks for the informative post and personal examples (I can completely empathize with the tax one!).
Okay, so I’m not the only one who hoods up on taxes. That makes me feel a bit better haha ?.
Exactly right though. I hate using it but it’s really nice to have the option when it’s needed. Speaking of tires, I need to get a new one. It keeps going flat! ?
That dental work all said and done cost just shy of $1400.00 and also completely paid off our credit card debt of almost $6,000. WOW we really have been rocking it. We believe it’s because we stopping thinking of it as OUR money but GODS money. We’ve been trusting God and tithing and being frugal.
That’s amazing! Keep at it!