Emergency Funds: What are they for?
August 3, 2006
BoyDucky asked a very simple question last night: “So, what’s the Emergency Fund for?”
……….
Huh. I always assumed, well, emergencies, of course! But you know what, it’s not that simple! Or, it could be. But, I’m me. So, it’s not.
The current E-fund is meant for strictly REAL emergencies, even though I have not really treated it as such. Real = loss of job, must pay rent and bills and eat.
I admit that I have been a little bad about this and allowed a little beg, steal and borrow action, but mostly because it’s the only E-fund I’ve got now. So, no more! Nay! From now on, E-fund Numero Uno is for REAL emergencies only. Also E-fund targets will be 10k for very focused saving and then from then I will continue to trickle in money until it hits 15k, the real limit.
That allows for the spawning of little Fundlettes. One will be the previously mentioned Oops-fund. That’ll be the first one because isn’t the first just about always an Ooops? 😉
Ok ok, not all first-borns are oopses ….
Hm, how high do you go, before an Ooops no longer and Ooops and more of an “Ighhh!” ? I’m going to say, 5k.
Another will be Wedding Fundlette. Anywhere between 5-15k.
The third will be House Fundlette. The sky’s the limit on this one!
So there we go: Emergencies are emergencies and oopsies are covered by the oops fund, when I have one.
We actually don’t have an emergency fund by name yet. We have the savings, but it essentially sits as undesignated and we don’t ever spend it.
As far as emergencies go, I’m not sure how to define that! I guess you just don’t know until they happen.
For someone with no flair for naming things, I like naming accounts a lot. Keeps things straight in my mind and prevents me from thieving from myself, if ever the temptation should arise.
I forgot to mention that I was also motivated to finish this post because of Claire’s post (Tired but Happy) on accidentally charging more than she can comfortably pay off in a month.
It reminded me of that conversation with BoyDucky and the fact that sometimes you just really can’t help having to charge more than you’ve allotted for the month.
I love all the discoveries of reality courtesy of this blogging community!