Recently I had a financial emergency that I was able to react to calmly. The thing is I didn’t actually have a ton of cash on hand (even though I had more than I normally would) I did, however, have a lot of parts of my life organized so that I could take a step back, assess my emergency, and then take care of business.
In the last couple of years I’ve read tons of personal finance blogs, books, and had dozens of conversations with people about the subject of savings. In the course of these conversations I realized that most of us are leaving large parts of how we prepare for emergencies out of the savings conversation.
We talk about money but neglect to mention the other parts of the emergency savings beast that we are dealing with such as:
1.) Keeping our pantries stocked
2.) Having enough hygiene products on hand at any given time
3.) Being ahead of or caught up with your monthly expenses
4.) Paying off debt!!!
Instead of savings maybe it should be called “Emergency Preparedness?” Aren’t we preparing for an emergency by saving money? Then shouldn’t we call it what it is? Maybe we have difficulty saving cash because we need to reframe (and rename) the process?
Your Emergency Savings Is A Multi-Layered Beast!
I have to admit that in terms of being prepared for emergencies my weak spot is car accumulation. My strengths have been: stocking my pantry, stocking my products, and paying ahead at least a month or more for different monthly expenses.
Here is a snapshot of my current process:
I. Full Pantry-Typically I have at least 2 months worth of food in my home. How do I know that? I ate out of my pantry (with a shop for fresh veggies at the beginning of that challenge) for 9 weeks. I didn’t eat crap, I ate really well. Some things that you should consider having on hand include:
- Shelf stable milk/soy/almond milk products
- Good quality canned meats-Salmon/tuna/oysters/octopus
- Dried beans
- Good quality (salt free) canned goods-beans/artichokes in water/tomatoes ( no sugar added) canned milk, etc.
- Tomatoes-Passata!! It is basically pureed tomato. Add anchovy, garlic, oregano, and basil and you have the best tomato sauce ever!
- Frozen fruit
- Frozen veggies
- Rice noodles
- Rice
- Oatmeal
- Frozen meats
And the list goes on. I am able to eat quite well using the food that I currently have in my pantry. If you’re curious about recipe ideas please let me know. I can write a post about using your pantry items into delicious meals.
II. Hygiene Items-At any given time I have about a year’s worth of product. I now stock up so that I have up to a year’s worth of items in the home, then, I use up the product for as long as it takes. I purchase a lot of items from the dollar store, or on deep discount. I tend to restock most of my items during the Spring and then use them up. Obviously I don’t have a year’s worth of toilet paper…but, when I live in a bigger home I WILL fill it with a year’s worth of toilet paper. Bwahahaha.
Items I currently have:
- Toothpaste
- Dental Floss
- Body wash
- Qtips
- Deodorant
- Perfume
- Soap
- And the list goes on 🙂
III. Pay ahead on monthly services-This one may be controversial for some people but if you’re the type of person who has a difficult time holding on to extra cash-this is a great way to prepare for emergencies. Some services that you can pay for so that you’re ahead of the game:
- Home Insurance-I’m about to pay off the year and won’t have to deal with it until March 2015.
- Internet-Pay extra on your bill.
- Electric-currently I’m over paying this with the idea of being 2 months ahead by September. I have a bigger goal in mind for my electric bill but that’s not for this post.
- Cable-I don’t have cable but if I did and I lost my job wouldn’t it be nice to be a few months ahead of this bill?
- Telephone-Again pay ahead
For me being prepared for an emergency isn’t just about cash on hand, it’s approaching my life from the understanding that I pay for numerous things on a monthly basis in order to be comfortable. By paying ahead I insure that my life will continue running in the way that I would like as I make adjustments during an emergency.
IV. Pay off Debt-Who wants to be dealing with debt during a job loss of an emergency that affects your cash?? I don’t. So, I’m focusing on paying off my final 2 credit cards by the end of this year. Let’s see how that goes.
V. Purchase gift cards and redeem during the emergency-I currently don’t do this but have decided to begin doing this in July. The idea is to purchase gift cards (without expiration dates) then redeem them during an emergency. You would also need to keep them in a safe place. I plan to begin purchasing them in $25 dollar increments. Examples of what I will buy include:
- Albertson’s Cards
- Whole Foods Card
- Starbucks (have to be honest)
- The Limited card/Goodwill Card (in case I needed to purchase new clothes for interviews)
I would keep the card purchasing to a limited amount each month. My plan is to use side hustle money for this. You could also gift these cards to friends and family who find themselves dealing with an emergency.
VI. Cash-For the love of God, cash is king! By having more cash on hand recently than I typically would I was able to deal with an emergency that recently cropped up. I’m still dealing with this situation and will be working hard to increase my side hustles to take care of the emergency. After experiencing how empowering it felt to have cash on hand, I can’t wait to fully fund my emergency fund in the next year.
Let’s be clear-emergencies will happen. If you are living you will deal with an emergency sooner or later. The question is: How well prepared will you be for that eventuality?
How do you prepare for emergencies? Are you cash focused?
Do you also stock up your pantry? Or, do you have a completely different emergency preparedness process that you use?
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I don’t prepare for an emergency by stockpiling. I only prepare by having the cash in a Capitol One (formerly ING) account. Accessible, but not too accessible. The reason I do it that way is because say I spend $500 on stockpiling food and toiletries, then all of a sudden my cat gets sick and need to spend $2000, but I only have $1500 because I spent $500 on stockpiling. The money for food/beauty products is not liquid. It’s spent and there is no way I can get that back. As far as preparing for something like a natural disaster, well I hope my two red cross emergency packs will do the trick. Otherwise I’ll have to wing it. 🙂
Typically, I approach stockpiling by purchasing small amounts throughout the year. I don’t feel comfortable dropping a ton of cash on a huge stockpile…because usually I don’t have a ton of cash on me:) For example, if I normally would pay $150 on groceries I would then pay an extra $25-$50 on the stockpile. It grows pretty quickly and then once the stockpile is done you’re good. I replenished my stockpile this spring and with the exception of soap and toilet paper I don’t need to buy anything probably until March or April. I also get all of those cute hotel samples too. In San Diego all of my hotel samples were from BLISS!! Can’t wait to use them.
I have my measly $1k in place for emergencies, but you’re right – emergency preparedness is more than money! We definitely need to work on stocking up our pantry and other goods such as toiletries. Paying down debt is another way I’m preparing for an emergency, since I don’t want to be stuck with any while I’m going through one!
I’m trying to really up my savings because that has been my weak spot. I’m super irritated with myself because I’ve saved cash before. I’m not sure where this financial block is coming from. I think that there wasn’t a sense of urgency with the cash part of my savings plan. I’m now feeling that urgency and hope I’ve turned the corner on this part of plan!
I am blessed with no debt (other than the mortgage), so that helps a lot. All the ’emergency’ cash is bundled with my mortgage offset, and takes a transfer for access as cash. In a SHTF situation, I do have a small hidden stash of cash. This is regularly used and replenished, those nights I’m heading out, need cash, and don’t have time to visit an ATM. But I restock it, and it’s there for when the ATMs may (and can) go down, when cash is king.
I keep a well stocked pantry, but tasty meals are harder to rustle up without meat and fresh vege, I know I wouldn’t starve. As to toliteries, nothing, imo, is that essential, so I don’t stockpile, other than having a refill for the hand soap handy. I sorta wish i didn’t have the tiny ‘stockpile’ I do have!!
Otherwise, like you, I prepay bills annually where i can – both health insurance, and insurance on both the property I own, and on the contents in my rental. I also always save ‘bill money’ with an automated transfer after every pay day, so I don’t see/touch that money!
I am so happy that you don’t have debt! My goal is for everyone to experience that feeling. I’m curious about the mortgage offset that you mentioned. Would that be the same as a Home Equity Line of Credit? I, too, am working on the home cash stash that is separate from my piggy bank 🙂 I have a well stocked pantry but the key is having good frozen meats/frozen vegetables/fruit. I am a toiletry fiend so everything is essential-LOL!!! I’m really focusing on prepaying the annual bills because I think that’s where people can easily stabilize their situation if the SHTF. You sound like you have an amazing ability to focus on your finances and rock them!
Offset is putting excess cash in an account, which is used to limit the interest on a portion of my loan (or all, but in my cash, only 20% cause you can only offset variable interest rate home loan). So, if I had $50k in my offset account, and my debt was $50k, then I would essentially pay no interest!! IN reality, I have about $35k to my $70k (part of my) loan.
I find this completely fascinating. I’m not sure that we have something like this in the U.S. I’m leaning towards we don’t. Hmmmm…maybe we don’t because Americans are notoriously awful at saving money 🙂
We have enough food stockpiled to last us around a month if we really had to eat the things we don’t really like eating.
Michelle am going to tease you now-stockpile only things that you like 🙂 But, isn’t it weird how those things slip in??
Im just reading this article now in 2016 and really like it….. Im working on havig 3 to 6 months of expenses, i always keep my pantry, deep freezer and 2 fridges well stock. I keep lots of hygiene product on hand to last about 6 months and toilet papel since i buy in bulk at sams club. Im working on paying off my deb and i been doing really good and dont pay ahead on bills because i never thought of it but i may start doing that.
People always teased me when I tell them that my hygiene stockpile is a huge focus. I don’t want to be stinky when things hit the fan LOL! My only word of caution is make sure you touch base with the business before you pay ahead to know what their policy is. Usually it’s not a big deal, but you never know.