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Airmen can get help on how to save more efficiently and invest extra money by visiting the Airman & Family Readiness Center. The A&FRC offers classes, financial programs and one-on-one counseling.(Photo by Tech. Sgt. Chyrece Campbell)
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Emergency fund--plan for the next "big one"
Posted 4/20/2011 Updated 4/20/2011
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by James E. McDaniel
65th Force Support Squadron
4/20/2011 - LAJES FIELD, Azores -- The recent prospect of a federal government "shutdown" provided a wake-up call that all Airmen (military and civilian) must have an emergency fund.
How many of us were really ready for "no pay" or "reduced pay" on 15 April 2011?
The scenario of a "no pay due" caused wide-spread alarm, and many started asking, "How am I going to pay my rent, car payment, childcare, insurance or necessities like food?" "Where can I go for extra money to live and survive?"
The possible shutdown of the government presented us with a great learning opportunity and real motivation to start saving for an emergency fund.
How much is enough for an emergency fund? How do you ever save enough to have an emergency fund?
These are questions that can be answered objectively, but each Airman and family must take action to build their own emergency fund today by consciously making decisions and choices not to spend all their income every month. We know that all of us will experience emergencies throughout our lives. Today is the best time to start taking steps to build your savings for the next emergency.
What is an emergency fund? Plan for the worst and hope for the best! Prior to this event, many Airmen and civilian federal service workers felt that having enough money to fly home would be sufficient for an emergency fund. Most of us would not have thought the worst could be "no pay due" for an undetermined time.
Being able to financially survive without pay for three to eight months should be your new planning figure. Most financial advisors say Americans need at least three months of living expenses in a liquid form (savings or checking) to pay for emergencies. How many months could you survive from your checking or savings accounts without going into debt or borrowing from your retirement account?
How much is enough? You need to figure out how much it is costing you to live each month. Keep track of your spending for at least 30 days. Multiply this amount by three (months). How much is enough? You need to figure out how much it is costing you to live each month. Keep track of your spending for at least 30 days. Multiply this amount by three (months).
How can you save enough for an emergency fund?
Identify 'wants' versus 'needs' using your monthly expense tracking. Realize that every purchase of a 'want' reduces your ability to be financially secure for your 'needs.'
Make changes to reduce unnecessary overhead costs, such as to eliminate money wasters that are not necessary and actually keep you from reaching your goals.
Pay yourself first for your emergency fund and set up an allotment into an account that you will not touch unless there is a true emergency: a death or extreme illness of a family member or 'no pay due.'
Seek help on how to reduce your debts to minimize financial emergencies. Call the Airman and Family Readiness Center at 535-4138, and ask for an appointment to discuss your financial goals.
You must prepare now for the next emergency. If you are financially prepared, you will have the confidence and resiliency to deal with any financial emergency that can be thrown at you. |
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