The importance of an emergency fund – the first 1500$ and the ability to deal with whatever life throws at you

A while ago I started a Money Series on the blog and if you read the blog post and tried to budget for a month, you have successfully finished Step 0 – Now you know what you’re spending money on. If you didn’t, you can start now as the month has just begun.

Step 1 is one of the most important and life changing ones. The Emergency Fund. It’s usually a sum between 1000$ and 1500$ (it’s the average amount that could cover almost any type of common emergency) but depending on your currency you might just settle for something else. For us, it was 5300 RON. And it was a painful experience, but totally worth it. It was a test for our will power and for our relationship and obviously, we passed.

So what is an emergency fund?

Is a sum of money you have available for emergencies, obviously. But you have to be very strict about what constitutes an emergency. If your car breaks down and you cannot move around without it, that’s an emergency. If you have an accident or someone gets sick, if your pet needs an urgent trip to the vet or if your washing machine breaks down and you have 3 kids, then you’re probably in trouble and need money. But if the new iPhone is launched or if you want to go to the movies or meet friends, you will have to wait until the end of the month.

Why is this Step 1 when you have debt to pay?

When you start saving money or paying off some debt, you need to be focused on that and anything you have at the end of the month will be sent into that fund. You do that by planning and budgeting, so if something like an emergency comes up, your entire plan has to change and your life is turned upside down. You need to focus on the task ahead without any distractions. That’s why you need a separate fund to deal with whatever life throws at you and still keep up with your planned budget for the month. You won’t see progress in your savings or debt repayment if you keep getting money back out to deal with emergencies. 

Why is this so worth it?

S#!t happens. People get sick, accidents might happen to anyone, cars break down. When unexpected things come up, your life is usually severely disrupted. Considering the level of stress you would be experiencing, the last thing you want is to also stress about money. “How do I get the money for this?”. Don’t be that person. And even if you are (we’ve all been there), you might start to consider that what I’m saying here makes sense.

The last time we had an emergency ourselves was at the end of last year when Leona the Beagle was attacked by another dog at the park. It was pretty serious, but the vet was close to the park where it happened so Alin acted quickly. When you see blood and a terrified injured dog, the only thing you think of is to do whatever is needed. There is no time to start thinking if you have enough to cover the operation or make phone calls to ask someone else for money. You need to have something ready so your dog can live. Our vet is very professional, but I know of others who ask for the money upfront otherwise they won’t do anything.

So how do I get this fund?

It’s for emergencies, so you should build it up as soon as possible. I think we managed to get it in about 2 months, with a lot of sacrifice. When building the fund, this has to be your main goal, everything else is second place. Keep your recurring bills of course, but minimize everything else. We stopped going out for a while, we started cooking our meals instead of buying for the work week lunches, we didn’t have any takeaways, we walked as much as we could so we wouldn’t pay for transport, we went to my mom’s place and got food during the weekends, we sold stuff around the house. We did some crazy stuff! We lived with the bare minimum and maybe less.

We had a birthday during that time when we were saving for the emergency fund. We didn’t even buy a gift, I made it myself. We stayed at the party for longer than we planned so we couldn’t get the tube back. I cried when I realized we would need to get a taxi. With all the sacrifices we were making, getting a taxi seemed like a luxury with a price that I didn’t want to pay. But we didn’t have a choice. 14RON that could have gone towards my 5300 went to a taxi driver. We were heartbroken.

The habits from Step 1 will help for the rest of the journey

During the time you build up your emergency fund you’ll learn all sort of tips for saving money, because you kinda have to. All this knowledge will help with Step 2 (get rid of debt) and 3 (increasing the emergency fund) and it won’t seem so hard anymore. I’m going to try to post a few tips around saving money on the next “episode”.

So what do you think? Will you start an emergency fund? You can do it as a challenge – how fast can you build it up? And if you have one, how long did it take you? Do you have any stories around it?

The importance of an emergency fund. Dave Ramsey's Step 1 into financial freedom.


  1. Emergency fund is such an essential for everybody to have! And so many don’t have one!

    1. Author

      Yes, it’s like a snowball!

  2. this post educates me on financial front . A very much needed area Thank you

  3. This is a great post idea! Everybody needs an emergency fund stash somewhere but yet a lot of people don’t do it

  4. Ugh an emergency fund seems like such a pipe dream right now. Definitely something to do when we have more steady income.

    1. Author

      Start small and then it will build up. I always think that money reproduces once you have some :P.

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