Sprenger Properties 

Emergency Fund

Why, What, Where and How


Being associated with house rental business I have heard many reasons why the rent cannot be paid:
  • I owes Rent-a-Center, and if I don’t pay I will lose my big TV.
  • Someone stole my car, so I couldn't work.
  • Car broke down had to pay car repair bill.
  • Had to bail boyfriend out of jail.
  • Need to make a car payment or will lose car.
  • Have to pay baby’s doctor bills.
  • My husband got electrocuted.
  • Had to pay to electric bill and late fees because electric had been cut off.
  • Our son died, had to pay for funeral.

While some of the reasons are creative and some are sad they all have one thing in common.  They are all wrong!  The reason these people could not pay the rent is because they did not have an emergency fund.

Bumps in the road are going to happen:  Cars breakdown, layoffs happens, sickness happens.  The purpose of an emergency fund is that when the nasty bumps occur you have some money set aside to deal with it.  Imagine instead of having a crises, then a bigger crises, and then a bigger crises until all goes spinning out out of control you could just pay when those unexpected emergencies occur.  You can if you have an emergency fund!


An emergency fund should be at least $1,000 and ideally be 3 to 6 months’ salary saved in a safe location.  This money is to be used only in case of a financial emergency.


An emergency fund should be safe (i.e. Federally insured) and little bit hard to get to.  So for example a coffee can full of cash in a kitchen cabinet does not fit the bill.  There are many options that will work I'll give two:

Bank Savings Account

Pick a a bank close to where you live, but different that your normal bank, if you have a checking account.  Deposits can be made on a regular basis using the drive up window or using a bank by mail option.  This meets both requirements.  Little hard to get to and Federally insured.  If you do not have a checking account this is the option I would reccommend.

Capital One 360 Money Market Account

This is an internet account.  Money can be transfered to and from your checking account.  This account is also federally insured and a little hard to get to the money.  When you need money you will request a transfer and the money is put into your checking account in about a day.  Deposits are made into the money market from your checking account as well.  You can set up recurring deposits to help your emergency fund grow -- say $25 on the 1st of every month.

If interested here is the link: https://www.capitalone.com/bank/growstrong/?external_id=360B_MM_SEM_71700000024688313_GOOGLE_58700002702868302_43700023221278293&gclid=EAIaIQobChMIjqPWqLe_2QIVQjyBCh23zwT_EAAYASAAEgIBd_D_BwE&gclsrc=aw.ds


How to you get money to fund an emergency fund?  Please don't say this is a good idea and I will do it someday, we all know someday never gets here.  Also don't wait till you have $1,000.00 to start it.  Start today - with whatever you can.  Even if it is just a $1.00.  To succeed making an emergency fund you have to want to do it.  With your desire I can give you two methods that are sure to work:

  1. With each paycheck hold just a little out for the emergency fund.  Do this first, before you spend any of the paycheck.  Start with $20 each paycheck.  Too much?  Then do $10.  Still do much? Then do $5.  Just make sure to do some every paycheck you be amazed who quickly this will accumalte (especially if you do $20 or more each paycheck).

  2. When you get a lump of money put half of it to the emergency fund.  For example a tax refund or those extra paychecks.  If you are paid weekly - 4 times a year you get 5 checks in a month, if you are paid bi-weekly - 2 times a year you will get 3 paychecks in a month.  Take these extra paychecks and put half the amount into to your emergency fund.