Many of the things we consider emergencies are not really unforeseen at all. Whatever you own, it’s going to run into trouble or break down eventually. Cars need tune-ups and tires. Appliances need maintenance. Taxes need to be paid. All of these things can be planned for. Planning ahead is not sexy or fun. We can find lots of things in the short term that our money can go to that would bring more pleasure. Unfortunately, then when the timing belt on the car breaks during rush-hour morning traffic on the freeway, you’re left with a $1500 bill you can’t afford to pay.
Take a look around your home and take inventory of the things that may need replacing or repair. Make a list of all your appliances. Don’t forget small appliances like the phone and large appliances like the water heater or air conditioner. Once you have your list start to research how much repairs will cost. Also research how much it will cost to replace the items. Once you have those amounts, divide them by 12. The quotient is how much you need to put away each month to be prepared for when you have to repair or replace.
This may seem like a daunting task. You don’t have to save for everything. A lot of items on your list probably won’t require repair or replacement each year. If that’s the case, make smaller payments to yourself. Some people like to put cash in an envelope labeled with what the money is saving for. I would rather put the money in a savings account. The interest isn’t a motivator; putting the money out of reach but still accessible means you’re more likely to leave it alone for its purpose. Set up automatic savings payments to the account and you’ll be ready.