Emergency Fund

Real Life Example Of Why You Need An Emergency Fund

My wife is an educator. She recently gave birth to our third child, a baby girl. Mommy and baby are doing great. Our older kids are adjusting and they are having so much fun, learning to feed and hold the new baby.

The timing of the birth worked out great. My wife will be home until school lets out in May – and she’ll be able to stay at home during the summer. Altogether, she’ll get more than 4 months with baby, before school starts back, next fall.

As you might imagine, due to the fact that she’ll miss the last few weeks of school, her paychecks over the next four months will be reduced. The actual amount of the reduction will be based on the number of sick days and personal leave days she had remaining, prior to the delivery, and the number of days she actually misses. Suffice to say, things will be a little ‘tight’ around the old NCN household, but we are prepared!

Why? Because, we have an emergency fund! With six months worth of expenses, set aside in our Orange Savings Account, we should be just fine.

Four years ago, when our son was born, we used credit cards to cover the gap between actual and expected income. But, not now. No, now we will use the funds in our savings account, to make up for the lost income. In fact, so far, we are doing just fine, living off of my income alone. But, should we need it, the money is there.

It’s amazing how much better we feel about our current situation, knowing that we have our emergency fund, and that it’s there if we need it. Plus, instead of worrying about paying back our creditors, we can focus on enjoying the new baby!

12 thoughts on “Real Life Example Of Why You Need An Emergency Fund

  1. That’s financial peace … and what a great feeling it must be! When our second son was born, we were still paying off the midwife bill a year later. My husband and I decided then that next time, we’ll have everything saved up for long before the birth … and hopefully, we’ll have our six-month emergency account fully funded by then. Thanks for the inspiration!

  2. Such a great feeling to know that money is sitting there for your use. It has been said that there is no pillow softer than having money in the bank.

  3. I’m starting on my emergency fund this paycheck! I can credit (at least some) of the inspiration to NCN, as well as your fellow bloggers. Good luck with the baby!

  4. Good post. A very good example of use for an emergency fund. It points out that many financial problems can be averted with a simple emergency fund.

  5. You have more financial education now, than you had with the first child. It’s better when you learn these things when you’re still young! good for u

  6. Wow, that’s interesting. Here in the UK we get statutory maternity leave is 26 weeks, the first 6 at a minimum of 90% of pay, and the next 20 at £100(ish) a week. You can take another 26 weeks unpaid. You’ll still need the emergency fund for the shortfall though.

  7. Congratulations on the new addition to your family! Plenty of people talk about the necessity of an emergency fund, but few actually provide testimonials of it’s application and importance. Thanks for this.

  8. NCN I just made a post about the EF basics. It must feel very reassuring to have the 6 months of expenses sitting there while you go through reduced income. My wife and I don’t have any kids yet, but we will most definitely stockpile money to handle things that will happen during that time. The last thing I would want starting a family is going into debt to do it. Congrats on the baby too!

  9. @Jim, Yes, it does feel reassuring to have the emergency fund – and even better knowing that we can ‘survive’ on just one income.

  10. Awesome! Congratulations…on the new baby and on being financially prepared for the little person’s arrival. Enjoy: may all your parenthood be joyful.

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