Accepting The Value Of An Emergency Fund

People who know me personally know that I can be damn stubborn. Tell me something needs to be done a certain way and I’ll question it and often end up doing it my own way.

When it came to emergency funds, I wasn’t much different. Sure I keep a modest sized buffer in my bank account, but I scoffed at the idea of keeping large amounts of cash at hand. It seemed to go against everything I was learning about investing. Here’s an older post about my previous thoughts on emergency funds.

I’m starting to realize that some kind of emergency fund is fairly important. I know in my case I don’t need tens of thousands of dollars in my emergency fund. I do need some kind of backup though. I can also see why in some cases a larger emergency fund might make a lot of sense, especially if you have kids or other dependents.

Sure you get a higher return by investing the money, but how accessible is that money at all times? Do I really want to resort to juggling a credit balance if I lose my job or run into other problems? That’s simply a gamble that may end up costing you more in the end.

When an emergency hits the last thing you want to be doing is adding stress by not being able to deal with the problem right away. Instead allow yourself to focus completely on the problem at hand.

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How big an emergency fund do you think is adequate in your situation? Do you already have that amount put aside?

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