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About 40% of Americans are one unexpected emergency away from broke.
You work hard for your money. Hopefully you’ve set up a budget, telling every single dollar where to go and what to do. Having that sort of plan is a great thing… but what happens when life doesn’t go according to plan? Many Americans (~40% according to the U.S. Federal Reserve Board of Governors) are one emergency away from going broke. It’s not a happy thought, but it is the reality we live in. 

One of the easiest things you can do to protect yourself from such an emergency is to establish an Emergency Fund. As a part of your budget, make it your mission to set aside some money for your emergency fund until you have $1000-$1500 acting as a buffer between you and that emergency. You don’t have to do it all at once. Set aside what you can afford, even if it’s just $5-$15 per paycheck. To truly ensure you’re protected, you should set aside as much as you can, even if it means cutting out some of the fun or luxury items from your budget for a few months. If not, the next emergency could take them away for much longer.

Expect the Unexpected
If you don’t have an emergency fund set aside, then when your child gets sick or your car breaks down or one of a thousand different things happens, you will have to take money away from other areas of your budget. No one wants to be in the situation where you have to choose between keeping the lights on, or buying medicine that could keep you out of the hospital. 

If it’s not a true Emergency…
The hard part isn’t getting your Emergency fund up to $1500. The really hard part is letting that $1500 sit there. It could be a huge temptation to take that $1500 and spend it on something you want, indulging in instant gratification, rather than saving up the money over time. It might feel like you are missing out, or that that money is being wasted by just sitting there. But the way the world seems to work sometimes, the minute you do that and that $1500 is gone– that’s when the unexpected emergency is going to happen. And chances are, the joy you got from spending that money on a non-emergency will be nothing compared to the stress and hardship of having to pay for the curveball life threw your way.

Letting that money “just sit there” isn’t wasting it. That money is standing guard over all of the other money you make and spend day after day.