Plugging the leak in your Emergency Fund
[Image credit: Max Pixel]
When I speak to people and ask about what types of things cause them stress, one of the common responses is “dealing with emergencies”. Emergencies can be seriously stressful. Not only is the situation a complete spanner in the works, but the problem needs to be solved straight away, and can often be expensive.
While the definition of an emergency differs depending on who you speak to, there are a few common things that impact all of us. Is this you…? You’ve started looking into ways to manage your money, watched Youtube vids, read some published articles, maybe downloaded an app or two… and they all say you need to have an Emergency Fund.
If you’re anything like me (and I think I’m pretty normal) no sooner had I set up an emergency account, an emergency would crop up and it would be gone! And I’m not saying I really felt like going out to the movies that night, I’m talking about emergencies that I had to deal with immediately – like when a car recently merged into the side of me without looking properly.
If I wanted to get the car fixed straight away, I had to pay my excess upon lodging the claim and await a refund from the insurer.
If I still lived the same way I had before discovering Income Organising, then I probably couldn't have even lodged the claim in the first place.
Do you have a leak in your emergency account? Every time you put money in, it drips straight back out?
Let's get onto plugging that hole!
How many of these emergencies can be predicted?
For example, a fridge lasts around 9-12 years. How old is yours? If it’s 5 years old, then you have 6 years to plan for the expense of it dying one day. If it’s 11 years old, you have 12 months to prepare. If you wait until your fridge is 15 years old and it dies… was this an unexpected emergency? Here are a few common items to get your started:
Dishwasher: 9 years
Water heater: 10 years for gas, 11 years for elect
ric and 20+ years for a tankless heater
Oven: 13 years for electric and 15 years for a gas stove
Refrigerator: 9-12 years for a compact fridge and 13 years for a normal one
Microwave: 9 years
Car: parts that have timetabled replacement - timing belt every 100,000kms, tyres every 5 years, battery every 5 years, etc.
YOUR ACTIVITY FOR THIS COMING WEEKEND Walk around your house, both inside and out, and write down everything that you know will need replacing at some point. Write down how many years you expect each to last, and how old you think each already are. That will help us put it all together in a nice rounded plan later on.
Next we'll move onto the second step... writing yourself a firm definition of 'Emergency' that you can (and will!) stick to.
Have a wonderful week,
The Income Organisers