Financial issues are one of the most anxiety-producing areas we might have to deal with as women on our own. Last we touched on it here, we talked about extending your emergency fund, but I realized that I might have put the cart before the horse a little. Before you can survive on that emergency fund, you have to have one in the first place.
By you, I mean you individually. Even if you have a partner and might have shared emergency funds, you should have your own separate account for your own separate emergency fund, that only you have access to. That money is to bail you out of trouble when you need it. You may decide at some point that you want to contribute it to a household need, but that’s entirely up to you. You can also decide to keep it aside just for you. If, for whatever reason, you are unable to safely access household accounts, your personal emergency fund can keep you going until those issues are settled. Those can include everything from needing to run away from an abusive relationship, to having joint accounts frozen after your spouse’s death, to simply having problems with your debit card for your regular bank.
Sidebar: there are a variety of options for managing household finances with a partner or roommate(s). You could decide to completely combine finances and have all of your income go into and all of your expenses come out of one pot. You can half-combine finances and contribute agreed-upon amounts into a joint account, from which joint expenses are paid, and everything you don’t put in is yours to do with as you wish. You can half-combine finances the other way and have all of your income go into and all of your joint expenses come out of one account, but one of those expenses is an “allowance” that goes to separate accounts for you to spend as you like. Or you can have completely separate finances and simply come to an agreement on who pays what expenses, and perhaps pay certain amounts to each other where it makes sense. All of these and variations of them have pros and cons but regardless – still have your own individual emergency fund no matter where you end up with any form of shared finances.
If you have your own income, putting aside a small amount every time you get paid is the easiest way to build your emergency fund up. It sounds obvious, but sometimes we have to be reminded to divert those couple of dollars every few weeks. If your employer supports it, you might be able to do a split deposit that lets you automatically put some money into your emergency account and the rest into your normal, everyday account. That puts the money out of sight and out of mind, which may be easier for you. Otherwise, make it a calendar reminder or recurring transaction. It will be tempting to skip paying yourself when that extra cash would make life easier but remember: you’re saving for when that extra cash is necessary for your life. Five, ten, or twenty dollars at a time might not seem like a lot, but you’d be surprised at how much of a difference it can make when it’s truly needed.
As long as you’re paying yourself, try to do it with any bonuses or gifts that you get too (not to mention tax returns). I’m not saying you have to save every cent of a surprise windfall, but before you spoil yourself with something fun, stash even ten percent or a quarter of it into your emergency fund. You’ll thank yourself later. I promise. If nothing else, doing this regularly may help you discover one day that your emergency fund is flush enough that you have saved enough for that and for another long-term savings goal that is more satisfying than the instant gratification of that one-time gift to yourself.
Because an emergency fund doesn’t need to be an unlimited amount of money. Opinions vary as to how much needs to be in it, but I’d suggest you start with trying to get to a few hundred dollars, then a thousand dollars. After that, start considering how much money you need for two months of expenses with extra spending cut out (which, if you think you might need your emergency fund to escape a current living situation, should include things like apartment rent deposits), then at your regular rate of spending. Then try three or even six months, depending on how long you think you might need to replace your income source. Or if you know that your car is almost to the end of its life, maybe think about how much you’d need to save to replace it when it does die. Or if you’re living away from family, maybe you just need enough in your emergency fund to get a bus or plane ticket home. Or if your job is toxic and horrible and you want to be able to just walk out one day, then how long will it take for you to find a new one? Just like preparing for physical threats, preparing for financial threats means being creative in imagining what could go wrong that you might need extra money, the likelihood those things might happen, then figuring out how much those kinds of events would cost you.
When bad economic times hit, you might not have saved everything you planned on needing…but every dollar more is one less you’ll be scrambling for then, and you’ll be that much safer from the kinds of threats you can buy away.