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Tales of the Unexpected: How to Deal with Financial Surprises

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“It’s easy to sit there and say you’d like to have more money. And I guess that’s what I like about it. It’s easy. Just sitting there, rocking back and forth, wanting that money.” — Jack Handey

I sometimes believe that life is like the game of “Life.” I mean, you get on a good roll and you think you’re going to get to the end with no problems, then BAM! you get hit with one of those cards that says “Oh, you’ve just blown a tire and its going to cost you $130 to replace it,” or “Your dog just ate a frog, go to the vet and pay $200,” or “Your girlfriend’s birthday that you should have remembered is tomorrow, buy a $60 gift.” The difference is, these events occur in real life every day and you have no choice but to deal with it. You just can’t quit this game of “Life”.

So unless you’re a millionaire (not the kind from McDonald’s) you don’t have the extra money to just throw at these unexpected problems. Unless you have, as the old folks say, “something for those rainy days.” It’s funny…as a kid I would always wonder if that meant that we would get to spend all this magical money that was saved up when it rained (yes, I was a very naïve and imaginative child). Of course, as I got older I knew it meant that, when life is raining all over, you need that financial umbrella to protect you.

I’m hip (fo’ sho’!) so I don’t call it a “rainy day fund.” I call it “emergency savings”. I mean that is what I’m supposed to use it for. Not for shoes, clothes, gadgets or even food (but my stomach growling is an emergency, right?). It should be your savings; heck in fact it should be your saving’s savings. Your primary savings should be the thing you use to save for things you want, like cars and vacations. Your emergency savings should be used for events like your car breaking down or your wallet being stolen on vacation.

I’d never had an emergency fund so I would end up dipping into my savings, which meant that I was cutting into whatever long term financial goals I had. (I’ll make it to London before I’m 30 if it kills me!). So I opened a new account (you can do this at your financial institution of choice) and since my paycheck is directly deposited, I deposit some of it into savings and some into “emergency savings”. Now, I’m not putting half my check into my emergency savings but I am putting enough to pay some of those $200 here, $300 there bills. I would say a good amount would be to start off with about 10% of your paycheck and work from there.

So tell me, what are some of your suggestions? How do you go about saving for the unexpected? Tell us how having (or not having) an emergency fund has affected you!