Guest post by Jenny from Mom Loves Best
Life throws families curve balls all the time. Sometimes those curve balls are manageable with minor readjustment, and sometimes they require significant sacrifices. Parents need emergency funds to cover the unexpected; instead of allowing life to strike you out, step up and practice your “A” game, so you’re ready for those curve balls.
According to Forbes magazine, 63% of American haven’t saved enough to cover a $500 emergency. Emergencies can come in all shapes and sizes; here’s why having a rainy day account will benefit your whole family.
Increases Familial Confidence
Planning ahead for unforeseen expenses inherently increases a family’s confidence in its ability to handle anything that comes their way. Suddenly have to replace two tires? Have a high medical deductible and need to fix a broken arm? Did the washing machine flood the laundry room? Have to take the family dog on an emergency visit? Experience a tree limb crashing into your home? Putting aside emergency funds builds a family’s ability to face the unexpected without fear.
Confidence is often hard won; however, if your family commits to saving just 5% of every paycheck for that inevitable rainy day or full on raging flood, then the actual event is far less traumatic than it would be. And in the event things need to be replaced, you’ll be able to do so without great disruption.
Knowing you have a bank account prepared for life’s unexpected events can significantly reduce the stress couples experience. Money exists as one of the top stressors among married couples. If both parents commit to saving emergency funds, then the money will be there when it’s needed. Having this invaluable resource reduces the likelihood of fights about money. It also reduces the stress associated with giving up something to free up money for the emergency.
Conversations such as which car to sell or which kid’s activity to cancel can cause stress to snowball. Kids understand a lot more than they often articulate; parental stress can filter down and negatively affect the kids. When parents agree to put a certain amount aside every month and only touch it when necessary, emergencies become less stressful because you know you can financially cope with them.
Being under prepared when emergency strikes can disrupt a family’s routine. Children may have to give up after school activities such as dance or baseball because the money isn’t there to pay for it. They may have to skip field trips or other activities requiring additional cash that isn’t on hand.
In addition to the stress, these decisions often result in guilt as well. Parents may need to take a part-time job to cover the emergency’s costs, which means less time with kids on the nights and weekends. By saving money now and letting it accumulate, parents will be able to maintain their family’s usual routine if disaster strikes.
Improves Parental Interactions
Emergencies can bring out the worst in people; they can cause doubt, stress, disagreements, and fear. However being prepared for the unexpected removes a good chunk of this because parents know how they’ll pay for a new washer, an emergency room visit, or a rental car. Saving money should be a mutual decision, as should how much the family can afford to save each month. And saving money can be hard; often after student loans, mortgages/rent, car payments, and other life expenses are covered, there may not be a great deal left over.
However any money you can put aside is helpful in an emergency, so saving should be a family priority. When parents have available resources, their interactions during an emergency are much more positive. Such funds allow parents to think more clearly, plan better, and react more appropriately to stressful situations.
So, exactly how much should a family aim to sock away? Great question! The experts at Vanguard recommend aiming for between 3 to 6 months of your typical expenses. Consider what you spend on housing, food, health care, transportation, and debts. Factor in necessary kid expenses such as diapers and formula as well. Whatever this total amount is, multiply it by at least 3. Start saving what you can, even if it’s only $25 a week. Untouched, this money will equal $2,600 after one year; the more you can save, the better!
Jenny is just another mom trying to do her best. She loves making lists and trying to help others find what they are looking for. When she’s not using her powers to find her kids’ missing socks, you can find her sharing the latest parenting hacks & tips on her blog and Pinterest.