Life is chock full of surprises. Sometimes, a van will pull up to your house and hand you a big cardboard check for a million dollars. But the far more likely surprises are not nearly as welcome—a natural disaster could damage or destroy your house, you or your partner might get too sick to work, or you might find yourself laid off or fired. (If that’s the case, hopefully, like one forward-thinking Kiwi, you brought along your emotional support clown.)
It doesn’t even have to be so dire; a blown transmission could cost you well over $1,000. A bill like that and you might be SOL, which, if you choose to interpret in polite language, means you’re Supremely Out of Luck financially. There’s no doubt that a sudden loss of income can totally screw up your finances—make you vulnerable to amassing huge credit card debts in order to cover expenses, which you may never be able to pay off. Even if you’re subsisting on $.30 packages of ramen, you still gotta have a kitchen in which you can prepare it. This is where the Emergency Fund steps up and saves the day.
What’s An Emergency Fund?
An emergency fund is an easily-accessed source of funds that you’ll be able to use if things in your life temporarily go south. “Easily accessed” in this case should not mean stuffed in a mattress, a practice which an alarming number of people actually do. Not only will stashed cash be vulnerable to hungry vermin (one Indian rat gobbled seventeen large and promptly dropped dead) inflation will assure that any amount you stuff in the Serta will be worth less and less as the years go on. Easily accessed means liquid, i.e., you can either log onto an account and transfer it to your checking or march into a lobby and get it any time.