BOP Blog

Today is Presidents Day, and the high temperature outside is 8 degrees.  There’s some snow and some ice, and it’s so cold my dogs will only go outside long enough to do their business off of the back porch.  I am at home with three small children, charging every device, praying that we don’t lose electricity for an extended amount of time and that we don’t have any busted pipes.   

Just in case 2020 didn’t sufficiently establish the unpredictability of life, 2021 is trying to show us who is boss. And it definitely isn’t us.  Because if it was, it would be 60 degrees, no wind, and the news outlets would be covering the news and not a girl who put Gorilla Glue in her hair. 

This got me to thinking about being financially prepared for the unpredictable.  Do you have an emergency account?  An emergency account buys you some buffer, and it actually helps not everything be a financial emergency. It can also prevent running up a credit card that you cannot pay off, or even worse, visiting a payday lender.   

Here are our emergency account tips: 

• Start small.  Your first goal is to put $1,000 aside.  If you can put aside $20 a week, then you’ll have $1,000 saved in about one year.  The key is: don’t spend it unless there is an emergency.   
  • Make sure this goes into an account separate from your primary account.  You need it to be separate, so it’s not as easy to spend on something discretionary – like when you decide you have to buy tickets to The Kinks reunion tour.   
  • If you get paid by direct deposit, ask your employer for a new direct deposit form, and put $20 to $50 a pay period into your savings account.  This puts your savings on autopilot, which makes it more likely to happen.    
  • Tuck away tax refunds, or a portion of your tax refund, and you will fund your emergency fund more quickly.   
  • Review your monthly expenses.  Is there anything you can eliminate?  My husband and I try to do this at least once a year.  Sometimes subscriptions can sneak up on you.  If you cancel something, consider putting at least half of the savings into the emergency fund.  
  • Consider discretionary purchases.  When you’re working on your emergency fund, try to cut out discretionary purchases until you have $1,000 saved.  Can you forego that pair of shoes or that cup of coffee for just a few months?  The faster you can fund your emergency account, the quicker you have built your buffer.    
• Next, work to save up three to six months of expenses.   
  • You get to decide what to include here, but when I come up with my monthly expenses, I include mortgage, utility, telecom, insurance, transportation costs, any loan or credit card payments, grocery expenses, and then a cushion for personal expenses like medical, clothes, gifts, etc. 

If saving $1,000 seems impossible, start with $500.  A little savings can go a long way, and it’s never too late to start trying to save up an emergency fund.  If the past twelve months have shown us anything, it’s that anything can happen.  Stay warm out there! 

Sally