Why is an Emergency Fund Important?

As I sit here writing my monthly blogs, my doorbell rings. It’s my next door neighbor (who I have not met before – the house is a rental with lots of turnover) coming to inform me that my son and his friend have driven a golf ball through her window.  Ugh!  This will be expensive.

The good news is that we make our kids save a portion of their allowance every week for the vague “future or emergencies.”  They really have not understood what their savings bank is for, even though I’ve tried to explain it several times.  Now, they will have a real world example of why you save some money out of every paycheck for emergencies.

It’s been so difficult to explain the need for the savings piggy bank that my older son raided his to buy a scooter about a year ago.   When I found out, I made him put his entire allowance in his savings bank until he had replenished what he spent.  It took months.  I also hid the savings piggy bank in my closet since he is not to be trusted.

Now, my younger son will use his savings to make a down payment on what will be owed to fix the window.  His allowance will go 100% to paying the rest and then to replenish the savings account.  Poor John, it will be a long time before he has spending money.

So, to all of you older-than-9-year-old readers, remember, always save at least 10% of your pay for your future or emergencies.  You never know when you might break something and need to replace it.

If these topics sound like they would be of interest to your employees, sales conference, or professional organization, contact me at 303-324-0014 or kristi@sullivanfinancialplanning.com for more information.


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