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Finances

The Number One Reason You Need to Start an Emergency Fund in your 20s

Uncertainty. You need to start an emergency fund in your 20s because life is so full of uncertainties and unknowns. Even when you think that you have planned for everything, those unknowns can rear their ugly head and ruin everything. Having an emergency fund is the perfect antidote to uncertainty. As we go through our 20s, many things will affect our financial situation. Be it job loss, a car breaking down, or some other incidental expense that you didn’t see coming. Some people may have parents who can bail them out of a tough spot, but what if you don’t? An emergency fund will save the day.

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I normally don’t tell many personal anecdotes but for this I will. This week I was hit with an unexpected vet bill (my cats are my children). The first vet I took my cat to told me that they think he has a blockage and if this is the case then he will need a $2000 surgery immediately to remove it or his bladder will explode in less than 24 hours. If you’re an animal lover you can imagine how hard this hit me.

One of the reasons this hit me so hard was because I am currently trying to stretch $500 over the next 12 days before my next pay check. I thought I was going to have to put down my beloved pet because I am financially unstable. (Luckily, I took him to a second vet and everything turned out okay).

Like many millennials, I am strapped with student loans and credit card debt. Somehow student loan has come to be known as “good debt” as if any kind of debt is actually good. When we have debt, big or small, it limits our options in life. It eats away at our financial freedom and stability. In my low point, I started to attack myself, “If I wasn’t in debt I could pay this vet bill no problem.”

We never like to think that things will go wrong. I enjoy my ignorant bliss that my cats are invincible. But what if something does? An emergency fund will make you so much more prepared to handle that incidental expense. Now sometimes it might be that you do have the money to fix the emergency but choose not too because you realize that it isn’t as important as you thought it was. That’s fair, but at least you were able to make that decision for yourself. The option wasn’t taken away from you due to poor financial planning.

As I sit with my cat lovingly beside me, I don’t regret spending the $400 it ended up costing to get him the care he needed. I just wish I could have done it in a more financially secure way.

So how do you start saving an emergency fund?

Figure out what an amount that you can save is per month and then have your bank set up an automatic withdrawal to your savings. If you make saving as effortless as possible the more effective you will be at it. I have been successfully saving $200 a month for the last year using this method. My savings account is one that cannot be easily accessed. Taking money out of it can have a processing time of up to 24 hours. This prevents me from making rash decisions. As someone who has always struggled to save, this has really helped me out a lot. Plus, I’ve been able to watch my progress grow. Having those savings has given me such a peace of mind. Even without something bad happening, simply knowing that there is money ready for me if needed is reassuring.

Any goal is always more attainable when you have a clear end point (My post on bucket lists, relates to this concept). Start small and slowly build your way up to 3-6 months worth of wages. For example, you could start by only wanting $500. This is much more attainable that starting off with aiming for $5000. With an emergency fund you will be well on your way to financial freedom and security. Being prepared for an emergency that may never happen is far better than being struck down by an emergency that you were never prepared for. 

Uncertainty can strike at any age; however, building up this emergency fund in your 20s lays a solid foundation for a financially secure future.

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