A softer landing for life’s unexpected hiccups

blog emergency 2A basic tenant of personal finance that can dramatically improve your money life is having a cash emergency fund. It sounds so fundamental: put away some money for a rainy day. Yet so many people don’t do it.  Perhaps because they don’t have a solid answer to a simple question: Why?

 It’s especially important for some to consider this year, as new high school and college graduates make their way into the world.  As my own children come home from school and will again start another semester next fall it’s not too early to be prepared. Even parents who are financially responsible for children don’t save well. According to a survey by financial firm T. Rowe Price just 42 percent of parents maintain an emergency fund.

You only need one pervasive reason to start your own emergency fund, or add to an existing one. Hopefully you will find one here.


Bad things-expensive bad things-happen even to good people.  Cars break down, roofs leak and teeth need crowns. If you have the cash to pay for life’s curveballs, you’ll avoid putting charges on a credit card and paying finance charges or worse, taking a short term loan.  If you can’t pay the bill at all it will likely go to collections and damage your credit rating, making borrowing more expensive in the future.



If you have cash, you can choose higher insurance deductibles-the amount you pay before insurance kicks in-for auto and home policies, significantly and permanently lowering your annual insurance costs.  Common advice is to increase your auto insurance deductible to $1,000 and raise your home deductible to $2,500.  In addition, consider shopping your policies and potentially obtain a combined rate for both auto and home insurance at significantly lower rates.


Similar to insurance, having cash for repairs and replacements of appliances and gadgets allows you to forgo pricey extended warranties


A robust emergency fund can help compensate for losing a job, bridging the financial gap until you can land gameful employment.


I believe most importantly, having money tucked away can provide a peace of mind and a feeling of control. Some of the worst money worries never materialize but are conjured in our minds.  Having even a few thousand dollars stashed away can relieve anxiety and provide a sense of emotional financial freedom.

Related Post

Posted in Achieving Financial Independence, Balanced Living, Counting Your Pennies and tagged , , , , , , .

Leave a Reply

Your email address will not be published. Required fields are marked *