My husband and I both have very good job security so we didn’t feel like we would need a six months savings account that would just sit and lose value due to inflation.
When we finally paid off debt, I figured having a true emergency fund was worth it since that’s what all the personal finance experts recommended.
But it wasn’t until we actually had to use our emergency fund that I finally realized why it was so important to have one.
You Never Know
I know people say “oh you never know” and you think yes, you DO know that you’ll never need an emergency fund. Well, that’s what I thought too, until we found ourselves so grateful to have spare cash on hand.
My husband started a new position at his job. With this new position, he would be receiving pretty much a 70% increase in pay.
Because of the holidays, there was a six week break in pay where my husband didn’t work. So by the time he started his new job, we were desperately looking forward to his new paycheck.
Imagine our surprise when his paycheck was exactly the same as before?
Apparently, payroll had made a mistake and they wouldn’t be able to give him his new check until next payday, in another two weeks. Our rent was due that week and we needed to come up with cash quick since you can’t pay rent with a credit card. Enter our emergency fund.
It was the only time in our lives that we had a true emergency that we couldn’t use a credit card for, but we were so grateful that we had the cash on hand.
Having Quick Access to Cash
What’s more important is that we had quick access to the money, as the emergency savings account was tied directly to our online checking.
In the past, we had relied on online savings accounts such as Capital One 360 because of the higher savings rate. However, it takes about four days to transfer the money from your online bank to your checking account. That would not cut it in a moment where you need quick access to cash.
Money to tie you over
Our emergency fund is $1,000 that we just let sit in our savings account that is tied to our checking account.
However, we also have a more ample savings account that we keep in a higher interest-earning account. It’s up to you to save enough to where you feel comfortable should a true emergency arise, like one of you loses their job.
We have a substantial rainy day fund right now considering we’re saving for a down payment, so that doubles as our substantial emergency account.
We never thought that we would need an emergency fund, but it has come in handy and we’re glad that we created one.