Once again, and emergency fund helps someone through 4 months of unemployment. If you have been putting off adding to your fund, let this story be a lesson to you – back in July of 2007 my brother was laid off, and I wrote about how important his emergency fund was in helping him weather unemployment. Because he had a sizable amount of money set aside, he made it through a few months with no problems. Fast forward a year and a half, and my brother was laid off again in January – and just yesterday accepted a new position with another firm. So he had to provide for himself for another 4.5 months, and thankfully he had built up his emergency fund yet again. He was still able to pay his mortgage, his car loan, his monthly bills, and put food on his plate, even without working for that long. He didn’t need to charge up credit card debt or take out any loans because he planned in advance…something too many of us don’t do enough of.
Even if you are only able to put aside a tiny amount of money every month towards an emergency fund, start doing it NOW. Every dollar you put away is one less dollar you need to borrow or charge to a credit card should an emergency arise. With the economy the way it is, no one is immune to the possibility of losing their jobs; it could happen to anyone, at anytime, in any community. Even for people like myself who are self-employed, income is down on a monthly basis and emergency funds might come into play. So be sure to start putting something aside for that rainy day – take it from my brother who had to use his fund to live on twice in the last 2 years!