If you’ve read my previous posts, you know my daddy raised me knowing I always need a rainy day fund. If you’re native to the Houston area, you also know when it rains, it pours until everything and everyone is under water and stuck in their homes! Sometimes, I feel like this is the perfect analogy for my life. When an accident happens, its never a small one. When a surprise bill pops up, it’s always HUGE! So how much should we really save for a rainy day?
I think the answer to this question really depends on what your family looks like. When I start analyzing how much I would recommend a family save, I would first ask how many children a family has. We have four children which allows for a lot of oopsies that can cost a lot of extra money. If one gets sick, I’m paying $100 to urgent care. In two days I’ll need another $100 because the next kid is now sick. This is always just the beginning.
We also have two dogs. Pets are really good at spending money! Don’t misunderstand me – I save all the animals right after I save all the babies; the rest of you are chopped liver! READ THIS – Get a dog. Worth it! Hello healthy germs. But don’t expect them to be cheap. Pets should be factored into deciding how much money to save.
How many cars does your family have? How stable is your income? Is your company in the middle of layoffs? Is your salary commission based? Are you caring for an elderly parent or a sick relative? All of these should be considered when deciding how much emergency savings is enough.
Some experts would recommend you only save $1000 before you start tackling your debt. I would argue otherwise, especially with the number of possible unexpected financial expenditures I could face on any given day. Murphy’s law, right?
We have 2 adults, 4 young children (so accident prone!), 2 dogs, a home we own (that is OLDER THAN ME!), one car that isn’t a young spring chicken, and a bread winner with a very … flexible … income. I don’t think $1000 is nearly enough. I much prefer $2500 AT A MINIMUM. Perfect world would have me always sitting at around $4000 which would pay my “non-negotiable” bills like my house, car, and food.
If you have a smaller family – let’s say no children, two incomes that are very stable, and a cheap mortgage or no car payment – $1000 might be a great place to start! If you are somewhere in the middle, a middle amount could work for you. I don’t think any two budgets are likely to be identical. We all lead beautifully unique lives!
As you sit down for the upcoming month to analyze your spending in February and your savings for March, take a look at your emergency fund. Analyze how many “accident prone” people you have in your family, your income stability, and how much you think Murphy’s law applies to your life. Decide what your rainy day fund minimum will be and aim to keep it there.
Happy budgeting!
