Stash Your Cash for Calm

Layoffs, health complications, and car troubles may come as a surprise if you’re not a psychic. Surprise expenses can result in unpaid medical bills, withdrawals from retirement accounts, late mortgage payments, and even bankruptcy. The best way to prevent this is to create and stick to an emergency fund.

Determine your End Goal

First, figure out your ultimate goal. Every household has different incomes and amounts of spending, so, you need to determine how many months of expenses you would like to cover.

According to an article by, many finance gurus disagree on this topic. Suze Orman recommends saving eight months worth of income because it would usually take that long to find a new job. Well, other financial experts claim three to six months worth of expenses will do. We recommend seven months worth of expenses. There’s no single way to decide how long or how much you want to save. What is most important is it has to work for you.

Here are questions to consider for determining your goal:

– What is a realistic goal based on your income?

– Will you be able to downgrade your lifestyle if you get laid off?

– Do you have bad luck like Dick and Jane? (Jane quit her job and later that day, her husband, Dick was laid-off.)

Stash your Cash

The best place for your money is somewhere not so accessible for you to run to when flat screen TVs are on sale. But, it also needs to be accessible enough if an emergency occurs. mentioned Ray Lucia’s tip in their article, “5 ways to grow an emergency fund”. The nationally syndicated radio host has advice that may come to your advantage.

“I like using an account away from my normal checking account to build a psychological wall between my spending habits and my emergency fund. Credit unions work well because they normally allow you to start with smaller amounts of money.”

Here are a couple more ideas to consider:

– Online banks (you can’t just walk in and withdraw your cash)

– No penalty Certificate of Deposits. The interest may be lower than regular CDs, but you won’t be penalized for withdrawing money early.

– Money markets, which the investment management company The Vanguard recommends. According to NerdWallet, benefits include the same protection as a savings account but with a higher interest rate.

– A combination of locations such as an online savings account, in savings bonds, and as cash in a lockbox at home.

Stick with it!

Realize how important emergency funds are. Create your plan, and next, you’re on to the hardest part – sticking to it!

Here are a few Do-It-Tips:

– Figure out what counts as a true emergency. Discuss it with your spouse if you are married.

– Treat it like a bill. writer, Nancy Mann Jackson, recommends this. “Paying yourself first through a direct deposit from your paycheck into your emergency account will help you build that fund steadily”.

– Make it harder to access. This is mostly based on where you put your money, so be smart about it.

Of course, it will be tempting to take money out and tell yourself you’ll just replace it later. You’ll want to make compromises with your money. But, remember, emergency funds are for emergencies. Do you really want to ruin your savings just to go on a shopping spree? Your car could break down a month later, and you’d be strapped for cash. It happens. And no one sees it coming. Is that a risk you’d like to take?

With an emergency fund, you won’t have to stress about getting by without hitting a speed bump. You’ll have that financial calm you need.

And remember, we are here to help!


Written by Epiphany Johnican, Journalist for Money on Your Terms

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