I worry too much. Give me something that I know will happen in the near future – projects, events, what to do with the kids during the looong school holidays, etc. – and I directly start to worry and plan around it. Dear Husband says it is annoying and unnecessary but I think he loves me none the less 😉
When we decided a bit over a year ago that it was time for Dear Husband to leave his job and start on his own, it was of course covered in planning and we knew exactly how long we could manage until his income started to grow.
And then, what happened? Exactly one month after he started his own thing, our car broke down and we knew that it was not worthwhile to have it fixed. Oh, what sorrow, our “beautiful” burgundy Volkswagen Golf from 1995 that had a lot of sentimental value but not much else… It probably should and could have been foreseen and planned ahead that it was about to happen, but in our plan it was not supposed to happen for at least another year. How weird that things does not happen the way you planned, that would have made everything much easier!
Anyhow, we had our savings, but using them would have meant being left with too little money for the regular expenses in the month to come. In the end we used some of the savings for a new (used) car together with a small loan but all that could have been avoided had we had:
a) Planned ahead and put money on the side for a new (used) car that we knew would happen in the near future
b) Had enough in our emergency fund to cover this cost
Most financial experts agree that everyone should have an emergency fund. Today we have one and transfer additional funds to it every month. The consensus is that you should have around 3-6 months of what equals your living expenses in your emergency fund. That way, if you suddenly find yourself without work or unable to work, you will have some money on the side that will prevent you from getting into further problems and that saves a lot of worries in times that are already hard.
It is not easy to with all the expenses we already have, to find money to put on the side, but these things might help:
· Set a goal of how much you think you need for emergencies
· Set up some sort of savings account – not your regular spending account
· Start small: even small amounts will eventually accumulate into something bigger
· Make the monthly sum for the emergency fund part of your regular expenses
· Make a direct deposit of the sum into the savings account
Just remember, the emergency fund is for emergencies only, not new clothes, holidays or a new car….. 😉