Emergency Funds

by Donna Friedman

Suppose the first thing your boss says to you tomorrow is, “Clean out your desk.” Any idea how you’d manage?

Time for a financial fire drill: Imagine paring down your current expenses and creating a plan to cover just the basics.

“Basic” means exactly that—no indulgence left behind. Cut the cable. Nix eating out. Freeze the gym membership. Skip the salon.

You can be proactive in other ways, too: Investigate student loan forbearance. Find out how to apply for unemployment—and while you’re at it, stop by Benefits.gov to scan other forms of assistance.

Adjust your fire drill budget further by subtracting work-only expenses: extra child care, commuting, lunch.

Knowing your baseline budget is reassuring: If the SHTF, I could manage on as little as (scraped and sanded dollar figure) per month.

Compare that amount with your state’s unemployment benefits, plus whatever’s in your emergency fund. (Don’t have one? Start one.) Now you have some idea of how long you can manage until you find your next job. Or, God forbid, start a blog.

This came from an email I received from a site called Daily Worth.  I tried to find the article on the site to link to it but was unsuccessful.