[Image credit: Max Pixel]
Last week we took a look at Plugging the Leak in Your Emergency Fund.
We set a couple of tasks to do - how did you go?
You should have a working list of household items, their ages and how long you think each will last (it doesn't have to be perfect). Next add up how much each costs you annually, and break it down into pay periods (eg. fortnightly). Now you have your target. Every single fortnight, you need to put that amount aside. Avoiding this won't make the problem go away, it will simply cause it to be super-stressful when it DOES happen. It's a certainty.
Income Organisers are professional at this, so if you need any support or someone to step you through it, we can help! Book a completely free, no obligation strategy session now.
Today we're moving onto Setting Boundaries
Just last weekend I was having my hair done at an awesome little place in Altona. My usual hairdresser wasn't able to make it so I got to meet her fill-in for the first time. She'd been on maternity leave for just under a year and is starting to get into the swing of employed work again.
She told me about how she would really like to only be working one day a week or so, this soon after having a baby, but that emergencies keep coming up so she has to work at least 3 days per week, sometimes 4.
As someone that returned to work early from maternity leave, she had my absolute sympathy.
All you want to do is potter around getting to really know your new family member. You sleep when they sleep (none of this 8hrs solid stuff anymore) and thinking at an adult level? I don't think so!
Making conversation as we do with our hairdressers, I asked about what has been causing so much stress.
Here are the cliff-notes...
Husband got a gum infection, emergency surgery: $2600 (some bills still arriving)
Annual car registration (forgotten in amongst more important things like new baby): $800-ish
Amazing bargain on a cot at Baby Bunting: $1200
Oven repair $330
Pumpkin Patch closing so bought up big to save on buying gifts later: $700
there were a few others as well...
Unfortunately every time she would add money into the Emergency Fund, an emergency crops up and it's gone again. Totally deflating!
Emergency funds are IMPOSSIBLE! ... right?
Think about this:
Are there any overlaps between the purpose of your other bank accounts and the emergency fund?
What I mean by this, is if you already account for groceries in your FFFI account, then a grocery bargain should never be covered by your emergency fund. Never.
If you want to buy tickets to a concert but you've already factored Entertainment into your Income Organisers' Plan, then the tickets must come from that fund. Not from your emergency fund.
It doesn't matter if you plan to pay it back.
Conversely, if you haven't factored Entertainment into your Plan - you should! It's a regular, predictable expense. Therefore, it needs to be included in your Plan.
So next time you're tempted to cover a cost with your emergency fund, ask yourself these two questions:
Is it already covered elsewhere in my Plan?
Does this support the entire purpose of having an emergency fund? (Eg. does it bring you peace of mind)
If this comes up for you, and you make the right decision, I'd love to hear all about it! Send a quick reply to this email address so we can celebrate together!
Have a wonderful week,
The Income Organisers