There are so many reasons why you will want to consider having your own emergency fund in place to help with all of those expenses. You can budget for all of the regular and expected expenses that are going to come up in your life, but there will be big things that will come up over time that are impossible to plan for. If you do not have an emergency fund in place to handle all of this, then you will have to put it on your credit card or take out more debt to make it happen.
Setting up an emergency fund is going to be a smart way to handle some of the unexpected expenses that are going to come up along the way. But there are two types of emergency funds that you can consider, the starter emergency fund and the fully funded emergency fund. You will want to stick with the starter emergency fund if you still have some debts that you would need to pay off. You can fund this emergency account and then pay down the debts before moving up to the bigger one.
If you have any kind of consumer debt, which is any debt outside of your mortgage, then you will want to start out with a starter emergency fund. This is going to be a smaller one, usually somewhere between $1000 to $2000 depending on where you live. Yes, that is not a lot and it will not cover every emergency that you have. But it is enough to deal with most of what will come up while you pay down debt.
You will start out by setting up this kind of account and then, all the rest of the extra money that you have will be placed into the debts so that you can pay them down and get ahead. Once the debts are all paid off and you no longer have those to worry about, you can work on a fully funded emergency fund, which can include between 3 to 6 months of expenses that you want to cover if a big disaster happens.
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