As a couple, one of the best steps you can take financially is to have a joint emergency fund. This is easier to do as your income increases, but when you’re making less money, setting aside a stash of money is even more critical. My husband and I have always prioritized having money set aside for emergencies, but that amount has varied over the years depending on our life circumstances.
Building a Joint Emergency Fund
Most people agree that saving money is a good idea, but you may get stuck after that. To motivate yourself, it’s helpful first to answer these questions.
What Are You Saving For?
What do you anticipate needing the emergency fund for? Some people strictly see it as a fund that they never touch unless these lose their jobs or face a medical emergency.
There’s no right or wrong answer as to what you’re saving for. You and your partner should discuss this and agree so you’re on the same page.
Remember, too, that some people have multiple joint savings accounts—they may save for an emergency, an upcoming vacation, or future home repairs. You decide what works best for you as a couple.
How Much Do You Need to Save?
Next, determine how much you need to save. For years, Dave Ramsey has suggested having only a $1,000 emergency fund while you’re getting out of debt, but I found that amount much too low then, and even more so now with the high rate of inflation. Instead of looking to an expert to give you an amount to save, ask yourself these questions:
- Do you and your partner make roughly the same salary?
- Could you live off one partner’s income if the other lost their job?
- Is your employment secure? Is your partner’s?
- Are either of you freelancers?
You may only need to save three months’ salary if you both have secure jobs,. However, if one of you is a freelancer subject to ebbs and flows in work, you might want to save six months’ salary. If you’re both freelancers or work in a field like real estate where you may go months without a paycheck, you might want to save 12 months’ worth of expenses.
How Will You Save?
Finally, determine how you will save. Again, this depends on your situation and how you currently manage your money.
Separate Finances
If you have separate finances, you could agree on a percentage of your income that you will each contribute to the joint emergency fund. Or, if your incomes are similar, you might each contribute the same amount each pay period.
Shared Finances
If you already have shared finances, you can look at the budget together and determine how much you have to save each paycheck and where you can cut expenses to direct that money to the emergency fund. You can also put any refunds or unexpected money you receive in your emergency fund.
Final Thoughts
Building a joint emergency fund takes time, so don’t be discouraged. When you determine how much you can save per paycheck, divide the amount you want to save overall by the weekly amount to see how long it will take you to reach your savings goal. Don’t be surprised if it takes a year or more. The important part is that you start saving. As you build up money, even if you’re not at the total amount you plan, you will be in a better financial position than before you started saving.
Read More
Why You Should Reevaluate Your Emergency Fund Regularly
How to Save for an Emergency Fund
What to Do If Your Emergency Fund is Deplenished
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By: Melissa Batai
Title: Building a Joint Emergency Fund: Saving Together for Couples
Sourced From: www.dinksfinance.com/2023/12/building-a-joint-emergency-fund-saving-together-for-couples/
Published Date: Tue, 05 Dec 2023 16:03:28 +0000
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