Having an emergency fund for those unexpected disasters that happen to us all is wise, but for those of us who have children with additional needs it’s essential. We are often only one unforeseen opportunity away from something good to happen or one unexpected event away from something not so good to happen. Both might need immediate cash. Hence the importance of an emergency fund.
By unforeseen opportunity I mean something positive. A couple of years ago we received an email offering our daughter a chance to go on an adventure week during the summer holidays. Places were limited, strictly first come first served to be paid immediately. We booked and paid quickly because it meant she could be with her friends for a week of the holidays rather than be alone, which unfortunately often happens to our children because they don’t have the same levels of confidence and ability to meet friends independently without us being with them.
On the other hand, we have known times when we’ve had to pay for professionals or extra therapy sessions. Sometimes at times when we were already stretched. Without a reserve fund this would have put a strain on our budget and might have even meant she didn’t get the support she needed. But because we had an emergency fund in place for such events, we were able to do what needed to be done and weren’t worried about where the money would come from.
Back in the old days, as I discussed in My Biggest Budgeting Mistake, I would have used a credit card as a substitute for an emergency fund. But this isn’t how credit cards should be used, as an emergency loan for when I haven’t planned for the unexpected. It’s a cheat’s way out of a problem, and for that convenience I get charged very high interest rates.
But these days I have an emergency fund ready. I figured about a thousand pounds was enough to start with. I made ‘Emergency Fund’ an item on our budget, and saved as much as I could each month to get there quickly. I also keep it in a separate account so there’s no temptation to spend it.
Once I got to a thousand pounds, and I was in the habit of saving for this fund, I set about my next target: saving for three months living expenses so if anything goes wrong I have everything covered until and I have time to figure out how to deal with the situation. More of that next week in this Planning Ahead series; but I can’t describe the relief it feels to have at least some money in the bank to cover emergencies.
None of us want our children to miss out because of a temporary cash flow problem, and planning is the way to avoid that. I want to know that with the expense of summer holidays I can also cope with that unexpected windfall of joy if the chance of a summer camp comes along for my daughter. Or if the iPad is dropped, or the dog has a higher vet bill than his life expectancy. Whatever it is, I want to be ready.
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