Girl.  

 

Let's chat about something serious for a second...

 

EMERGENCY FUNDS.

 

Do you have one? If not... why?

 

What is an emergency fund?

An emergency fund is a savings account that you have solely for the purposes of, well, emergencies! Let's say you get laid off from your job (I really hope that doesn't happen but as they say, shit happens) or your car totally breaks down or your roommate unexpectedly moves out and you have to pay all the rent... etc. It's money you can use in those emergency situations!

Let's be honest... that's just how life is. Crappy stuff happens and we need to be prepared for it. After all, you're a twenty-something, professional, kick-ass woman. You're smart enough to prepare for inevitable emergencies!

And, I mean, let's talk about the alternative... what if your car breaks down and you need a new engine and you don't have enough money and you have to... gasp... ask for money from your parents?! Yep, that's a sure-fire way to feel like you're 16 years old again. 

 

 

How much do I need in an emergency fund?

Traditional advice (which I agree with) is to have 3-6 months of living expenses saved up in your emergency fund, and put it in a separate savings account so you aren't tempted to dip into it. To figure out your living expenses, brainstorm all the expenses that you currently have: rent, bills, groceries, gas, student loan payments, car insurance, etc. Add 'em up and that's your monthly living expenses!

If you're paying off debt, some people prefer to keep only around $1,000 in their emergency fund so they can put more money towards the debt. This is really a matter of personal preference; there's no right or wrong answer. If you're a paranoid person, shoot for a larger emergency fund!

 

Eh, I'll start saving later.

No. Here's my advice: start saving NOW!! Saving for an emergency fund isn't the most fun thing, I will admit, but it really is a non-negotiable. As I said, you're a twenty-something, professional, kick-ass woman. It's time for you to be smart with your money and have a plan for emergencies!

 

How to start saving?

First things first: open a separate account for your emergency fund. DO NOT- I repeat, DO NOT- keep this in your checking account. Partially because it'll be too easy to spend if it's in your checking account, and partially because having it in a separate place allows you to track it better and know exactly how much you have on hand for emergencies.

If you aren't sure you can afford to put money into an emergency fund, just start small! Put $20 every paycheck into the account to start building up the emergency fund. Once you get used to that $20/paycheck, gradually increase!

Additionally, to help keep you on track, set a few mini-goals along the way. For example: once you save $250, you'll treat yourself to an at-home mani/pedi/spa day. Once you hit $500, you'll have a cheesy chick-flick RedBox movie night. Set some goals and rewards (cheap/free ones, obvi) to keep yourself motivated!

 

 

Do you have an emergency fund?

I do! And I'm working on building it back up now that I'm back to work :) I keep mine in an online savings account that I can access fairly easy (in case of emergency, duh) but it's out of sight so I'm not tempted to use it for Target shopping sprees ;)