On Wednesday, I posted this article which highlights one of my most recent failures with the hopes of portraying some helpful advice and wisdom in your own efforts to overcome the occasional failure. We have all been there, and learning to deal with these when they come is an important life-skill. There is one more financially related point I want to touch on while the topic is still fresh in my mind.
The importance of an emergency fund – By definition, an emergency fund is a liquid form of currency that is large enough to cover all of your living expenses for 6 months; the goal of this, being to help you survive a job loss or large unknown expense. In the case of my large water bill, the shock to my finances was essentially a non-event. Had I not have 6 months of reserves handy, I probably would have had to charge it to my credit card and suffered an extremely high interest rate.
An emergency fund is not only important for your financial well-being, but it is essential for a better psychological being. By having an emergency fund, you are essentially self-insuring your family against the unexpected life expenses traditional insurance doesn’t cover. What if you need a new washer; a new roof; new car; or even worse, what if you have a large medical bill even after your insurance payment? All these things should scare the heck out of you if you do not have an emergency fund.
The lesson here should be pretty straight-forward, however it’s incredibly hard to have a semi-large amount of cash waiting on the sidelines while there are many potential things you could be doing with it. Trust me though, in the long run, and the occasional financial hiccup, you will be much better off.
Wonderful Moment of the Day: After my Wife reset the thermostat, I woke up to a house at 57 degrees F. It made me really appreciate waking up to a nice toasty home every other day. Needless to say, I could only put up with that for one day.
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