Christian Financial Planning, Budgeting & Investing

The Wisdom of Having an Emergency Fund Hits Home

  • Vicki Mosher Sound Mind Investing
  • 2011 8 Sep
The Wisdom of Having an Emergency Fund Hits Home

With each day's headlines seemingly inching us closer to another economic recession, it's easy to become anxious about your personal financial circumstances. That's especially true if you're walking a financial tightrope from one paycheck to the next without the safety net of an emergency fund.

As I've reflected lately on the families now facing significant financial challenges, I've been reminded of a storm I found myself in several years ago. Mine arrived in the form of a phone call that came suddenly one September. The chilling winds began to blow as I learned tests had revealed the dreaded six letter word, c-a-n-c-e-r, for my father, a widower. Within hours, I was flying to Florida to be by his side. The diagnosis was bleak. As events unfolded, Florida became my home for most of the next five months. Without warning, our two-income family was reduced to one income. This, coupled with the additional travel and personal expenses, totally depleted our emergency fund. I'm not complaining — I'm very thankful we had an emergency fund to fall back on!

You see, one of my responsibilities at SMI over the years had been answering your questions on the SMI Reader Services line. Many, many times I have had the opportunity to emphasize to others the importance of having a Level 2 emergency fund in place, and invested in such a way that you can get the money easily. Of course, I had no idea that events would one day transpire so that our family would be especially in need of one. It's a good thing I "practiced what I preach"!

That experience has caused me to consider what a blessing SMI has been to our family over the years. Before I came to work at SMI, my husband Rob and I were already subscribers. I wonder: Would we have made the sacrifices necessary to get debt-free if we weren't reminded monthly of the importance of getting out of debt? Or, would we have made the building of an emergency fund the priority that it became? I doubt it.

Let me encourage you to take a fresh look at your entire financial plan, and especially your savings strategy:

  • Even if you've not yet fully retired your Level 1 consumer debts, it's still smart to be putting some money aside each month for your Level 2 savings.
  • Is your target an amount adequate to carry your family through three to six months of difficulty?
  • Have you shopped around to find the best deals in money market accounts or bank CDs? 
  • If you've had to draw from your savings due to an emergency, have you made it a priority to replenish your fund as quickly as possible?

Rob and I made the sacrifices necessary to rebuild our emergency fund as quickly as possible. We look at following SMI's biblically-based principles as economic "storm insurance." Jesus said there would be storms in every life (Matthew 7:24-27). Unexpected phone calls come, needs change, companies lay off workers, refrigerators break down, and family members do get sick. Things that we don't like to think could happen to us, sometimes do. Be diligent and work hard to make sure you lay a proper financial foundation. Put into practice the wisdom (Proverbs 24:3-4) God makes available to you in preparing for the unexpected.

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