This is my post for Military Saves Week. No, I’m not affiliated with Military Saves (though I love to be) but I think it’s important to hold ourselves accountable to our goals. On to one of my favorite topics-emergency funds!
I think everyone should have an emergency fund, especially military. Why you ask? Well, we move a lot, sometimes we have to rely on only our spouse’s income, and they can leave at anytime which is code for everything in your house breaking.
Everyone will run into having an emergency at one time or another, but as military, I think we can run into more issues, more often. An emergency fund allows you to have a monetary cushion for when something happens that is unexpected. It allows your to think about the situation at hand, not how you will pay to get back stateside to see a sick and dying family member. We have several examples of this but the one I will share is when we were PCSing to the UK and my husband got into a very bad car accident.a few days before we were to fly out. I wasn’t sure if he was going to get cleared to leave but we had enough saved to pay for billeting if we got stuck at our old base. This gave us peace of mind to clear out of our rental and let him recover.
This is very personal amount to each family and their monthly expenses. Most financial experts said 3-6 months of your expenses but there are online calculators, readiness centers and financial advisors that can help you figure out what is best for you. A note on the one size fits all plans out there that say to start with $1000 as a emergency fund then build it up after your debt is paid off; it might work well for the stateside family that lives close to home with few liabilities. However, it may not be enough for the family that is overseas and has a rental home back stateside. Figure out the best amount for your family, in your situation.
What To Use It For
This fund can be used for completely unexpected emergencies. Some examples include if car suddenly fails to work, the oven going out, or visiting a terminally ill family member. You can also use this if you have short notice PCS orders just remember to replace the money once you get all of your allowances back.
What It Is Not Used For
This fund is not intended for vacations, Christmas gifts or school clothes shopping. Also, it doesn’t include maintenance on your car such as oil changes. This can actually help you have less car emergencies if you keep up on your maintenance.
This kind of savings is event based and should be prepared for in advance. An example, would be Christmas which is always on the 25th of December so you can put a little money aside every month for that event. The savings account you use for this can be the same as your emergency fund, but I feel it makes it less tempting to spend it if it’s in a different account.
Where Should I Put It?
You’ll want to put the money in a place that is not your regular account so you’re not tempted and it’s not very easy to get to. You also want to make sure it’s some what accessible because in an emergency, you’ll want it quickly. Most banks and investment firms will have some type of savings account to hold your funds. Your typical savings account will probably have a low rate of return. If you want the ability to have a higher rate of return consider more of a high yield or money market account.
I hope this was helpful and hope you will consider taking the saver’s pledge for military saves week.