Emergency Fund. What It is and How to Start Building Your Financial Happiness

Emergency Fund? Safety mattress? Do you have the feeling that it is impossible to save? Has it ever happened to you that when you finally, after a lot of effort, save something, an unforeseen event arises and shah… goodbye to what you saved? Do you think that the stars and the universe conspire against your Financial Happiness?

If you had answered both questions in the affirmative, and above all, if you already have an Emergency Fund or a Safety Mattress, you would have answered NO to the rest of the questions.

In my opinion, one of the bases for you to start building your Financial Happiness is that you build your Emergency Fund as soon as possible.

If you stay, you will discover the reasons for its importance, what it is, how to do it, as well as the recommended amount you should have. I propose a challenge, if you keep reading, and take action, this may be the beginning of your new life.

Do you accept the challenge?

What is That of the Emergency Fund or Safety Mattress?

No, I’m not talking about 112 emergency phones, nor am I trying to sell you a mattress.

It is about building and reserving an amount of money to cover future unforeseen events , which, as you already know, always come. That would be a plain and simple definition.

Unforeseen events, as you know, there are many kinds:

  • The typical breakdown of an appliance or your car.
  • It can also be something a little more serious such as an illness or period of hospitalization that you or a direct family member may experience.
  • Or the worst unforeseen event of all: losing your job and only source of income.

Most people I know, including my case a few years ago, are just one payroll away from bankruptcy. Nothing saved, nothing for contingencies, no safety cushion.

Hence the pressure and anguish they may suffer at work. They cannot lose it under any circumstances, whatever it may be, whether they enjoy it or not, have a good relationship with their bosses or not, feel fulfilled or not. They just can’t lose the job.

Why is It Important That You Have an Emergency Fund?

Summarizing a bit the concept of what I am talking about, it is about savings. But not saving as a healthy financial habit, nor as a strategy so that once achieved, invest it. Not savings so you can put your money to work for you. This emergency fund is not for that.

The emergency fund is only to be spent if the time comes.

I know what may be going through your head, that I have always told you about the importance of investing savings , that saving is useless, if you don’t know how to do it , even about saving methods . So how can I tell you that this saving is just for spending?

Because the first stone on which to build healthy finances falls on your own peace of mind. And there is nothing else that can frustrate you, that when one of the mentioned unforeseen events arrives, your savings vanish.

Just by knowing that you take into account that there are unforeseen events in life and that you have it “under control”, you will be more calm and prepared to face it, which will allow you not to break down in those moments.

Do you know what you get when you manage to gather your Safety Mattress?

Here’s why it’s important that you build your Emergency Fund.

Because You Achieve Your First Financial Goal

Yes, you have read correctly, since it is a smaller amount (we will talk about the amount a little further down) it may become the first Financial Goal that you achieve in your life, your first savings objective .

As it is not a very high amount (I will talk about the amount below), it is relatively easy to achieve this first financial objective.

And of course, if it is the first time that you set a goal in your finances and you achieve it, the adrenaline rush is guaranteed. The happiness and personal pride that you will feel with yourself is indescribable.

I assure you that for this reason alone it is worth trying… and achieving it.

Because You Get Tranquility

Another reason why you should build your Safety Mattress is because you will start to sleep better.

Knowing that you have an amount of money destined for any unexpected aspect, such as the breakdowns that we mentioned before, will give you extra peace of mind.

Make sure everyday unforeseen events don’t make you wake up at night.

Because It Gives You Financial Security

And of course, peace of mind is the basis of security.

Having your first Emergency Fund will make you capable of setting yourself more ambitious challenges in terms of your family finances.

You will be able to take a next step, and if this is your case, start fighting your debts or any other that you consider a priority in improving your financial health.

I assure you that once you start, you will have enough strength to propose new challenges and achieve everything you set your mind to.

And now, to finish this section, before I get into how much your Emergency Fund should have and How to get it, let me tell you where I first discovered this concept. It was from one of the best financial education disseminators in the world, Dave Ramsey, in his book “The Total Transformation of your Money”. He calls it baby steps.

How Much Should Your Emergency Fund Have?

Logically this will depend on your family and professional circumstances.

  • It is not the same if you are the mother or father of a large family (as is my case) or if you do not have a partner.
  • It will also depend on the stability of your job. An official is not the same as an employee employed by another and with a contract for months.
  • Your financial obligations and fixed expenses will also determine the amount of your emergency fund. It is not the same that you have a mortgage, that you live in your parents’ house, or that you have already finished paying off all the loans.

But in this post we are not going to go into this detail, I just want to achieve two things. The first that you become aware of the good that will make you have an Emergency Fund and the second that you take action and achieve it in the shortest possible time.

Therefore, now yes, even before you get to the How to build it section, I am going to throw you the challenge. We are going to set an Emergency Fund target of 1,000 euros.

The reason for this amount is very simple. Rare is the breakdown or unforeseen event that exceeds this amount.

And if it seems excessive to you, start in the middle, but set yourself this goal.

Grab a pen and paper and write down this objective, “I am going to get 1,000 euros in X time”, this will depend on your circumstances… and now, write down 10 ideas adapted to your reality in which you get either extra money or save some money .

Once this little exercise is finished, remember that a gram of action is worth more than a ton of intention , you can go to the next section, in which I will give you some idea of ​​how to get your first Emergency Fund.

3 Ideas to Get Your First Safety Mattress

No, I’m not cheating. I have asked you to write down ten ideas, while I will present you only five. This is also intentional, what I express to you may not suit your situation.

Also, no matter how much I tell you how to do it, it will be you and only you (if you had the help of your family, you would get it sooner…) who will get down to work to achieve your goal.

Therefore, as an example, I will tell you 5 ideas that usually work quite well.

Look Around You and Sell What You Don’t Use.

One of the fastest ways to get money is by selling. Look at home for everything that you haven’t worn for 3 months (if it’s clothes it could be 12 months, for winter and summer clothes) and put it on sale.

Luckily you have great allies, such as the internet (otherwise you wouldn’t be reading this right now) and pages specialized in selling second-hand items.

Any ideas can be pages like ebay , wallapop , vibbo or a thousand ads

Don’t Buy in Two Weeks

Maybe you do the family shopping once a week, even if you have frozen food or you can get by without going to the supermarket week after week.

Remember that now, you are focused on achieving this challenge. Check your home freezer and refrigerator and plan how many days you can go without shopping (even if they are daily purchases and little money, such as food).

Avoid going to buy the more days the better and pull reserves. It will be another extra money that you did not count on.

Look for the Money You Don’t Know You Have

That’s right, money you don’t know you have. Some examples:

  • Loose coins in drawers.
  • Several piggy banks at home.
  • Some bank account that you do not use regularly.
  • Money you have borrowed from a family member.
  • Old purses or bags.

Review all this and add it to your emergency fund. If you do some good detective work, you will be surprised by the results.

And up to here what I consider the first pillar to build your Financial Happiness. It may seem trivial to you. But no, I assure you that you will be able to get where you want, you just have to go step by step. And without a doubt build your Emergency Fund, it can be the first.

And now, if you want to help everyone reading this, drop by in the comments and tell me about any of your ideas that occur to you to add money to your Emergency Fund .

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