Have you ever had the car break down when you had to go and pick up the kids and there is an important meeting you have to get to tomorrow?
How to pay to fix these can be a problem, let alone the stress of how to pick up the kids, or get to the meeting.
It’s this feeling of stress that can then drive you to do things you don’t want to do. Like pay more than you need to for the repairs, or go buy some chocolate and a bottle of wine so you feel better or both.
You may be thinking, actually some chocolate and wine would be quite good right now and you might be right, but what if you are doing this only because you want to feel better?
This is what I want to talk about.
Your Emergency Fund of $500 to $1,000 is what gives you a buffer between you and the stress.
If there is an issue, or your car breaks down, you’ll want it fixed quickly. How great would it feel if yuo didn't have to panic?
By having $500 or $1,000 in a bank account you think different, you feel different and you definitely take different actions. Watching the car break down, you still get the feeling of ‘oh bugger’, but you know that the car will be fixed and getting the bill paid will be fine, so the stress is different and less.
With less stress, the kids get picked up from school, you get to the meeting and everyone is happy. After you use money from your fund, you rebuild this as quickly as possible to make sure you have that same feeling of safety as you did when the car broke down the first time.
What will happen over time is you will feel safe, less stressed and your car will stop breaking down because you find the money to maintain the car.
An Emergency Fund means you feel great and you start to win more. I know this works because of everyone I have worked with who has built an Emergency Fund and seeing how they are.
Want to know how to build an Emergency Fund? We go through emergency funds and how to build one in the 12 week debt freedom course.