Frugal Moms

An emergency fund is the number one thing any person with an income and a mind towards economics should endeavour to do.  An emergency fund can help in times of extreme economic distress.  Recently my husband was laid off, but since our emergency fund gave me about two weeks to find employment I wasn’t as anxious.  While two weeks isn’t an ideal amount, it is better than nothing.

The ideal Emergency Fund is 6 months worth of expenses.  While we only have 2 weeks of expenses covered, I do have several freelance jobs which I haven’t really been putting every effort into.  I also know that if I do, I can make about 2/3rds of my husbands original pay.  So my plan B had several parts to it besides savings.  However, if we didn’t have at least those two weeks of expenses saved, we would be in a rather tight spot since it takes at least 2 weeks for my efforts to pay off.

When you make your Emergency Fund, keep in mind how long it usually takes to find economically similar employment.   According to recent studies, up to 20% of people that lost a job, didn’t have another (at all) after 1 year of unemployment.  Also there is some data to suggest those that took employment sooner, did so at an economic cost.  As in, they took lower pay then their last job paid.

This isn’t uncommon.  As a 17 year old I made easily 7.50 an hour.  I have not seen that kind of pay since, even though I am now 28 years old.  I have however, made similar pay, but only by working for myself.  Which is another thing to keep in mind, if your emergency fund runs out and you haven’t found any employment, you might want to consider going into business for your self.

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