Planning for emergencies is rational. It is common sense to have an emergency fund that you can depend on when disasters happen. Here is how to go about it:
Know your financial position
It’s great that you have decided that you needed an emergency fund to feel better equipped to deal with the unpredictability of your life. It’s just great. The problem is that to actually be in a position to develop an emergency fund that will be useful in the long term, you need to have realistic financial goals that have a bearing on your average income level. This is a very difficult thing to do because most people are not objective about their financial potential. Developing a solid understanding about what you could realistically save is paramount to you creating an effective Emergency fund. The key is to always start small and eventually build up big chunks of money that will cover all your expenses for a few months time.
Convert it into a necessity
In your mind a contribution into the Emergency fund should seem unavoidable no matter what the context. The secret to making the emergency fund a reality lies with the mental dexterity you are capable of. How much priority you give your future the present moment is very important in this venture. Treating the emergency fund like a bill that you need to pay every month would probably be helpful. It has to be understood from the very beginning that your commitment for this should be total.
Make sure you define “Emergencies”
Your dying cat needing a liver transplant is an emergency. But gambling on Fantasy Football is really not. Sometimes it can look like certain personal needs warrant the tag of an emergency. In these scenarios only you are capable of an objective assessment that does justice to the rational human being that you want to be. Always remember that you see rainy days coming in your future and understand the necessity of being self sufficient. Granted, it will be very hard to consistently live that way but when your emergency fund grows in size you will grow more in confidence with your decision.
Cut back on everything
Deny yourself. Constantly second guess what your actual necessities are. Break all your preconceived notions on what exactly your actual needs are. Cease dependence with certain products that you thought you could not live without. Leave a certain brand a Karachi biscuits that your life won’t be the same without, make it a point to replace it with Arrowroot. Make yourself aware what it is like to live without things that you think you need. If you do this right, the emergency fund you’re actually creating can last you more than its requirement.
Modern living requires a constant sense of adaptation. It is always best to know that you have money in the bank that will help you deal with difficult situation. Depending on other people to drag you through the hardest parts of life is not responsible living. It probably time for you to start living and achieving a certain level of self sustenance that will let you sleep well at night.