Do I really need an emergency fund?

So many people have different opinions about how and when to start an emergency fund. Some debate whether it is necessary at all. I personally think paying off debt (apart from a home loan) is paramount. Every single spare cent should go into paying off those debts, whilst living well below your means. Sorry, but no ifs or buts about it. Once this is done, you need an emergency fund.
The reason I recommend having an emergency fund is to not only have a safety net for when crap hits the fan, but also so that, mentally, you can relax knowing your covered. So many people trick themselves into thinking “it will never happen to me,” until it does happen. P.S. Is it really that bad to have money sitting in an account earning interest for you? Ah, no.

Start with $1000 and build it to six months worth of expenses. If you can only put away $10 a week, do it. The key is to just get started. It’s so easy to say, “I only have a tiny bit of money so what’s the point?” The point is to get the ball moving. Soon you will see that you could probably give up those two coffees once a week just while you start. Hey, presto! You’ve doubled the amount you are able to transfer into your emergency fund.

Struggle to keep disciplined? Automate it and forget about it. With the wonders of internet banking, setting up automatic future transfers is simple. You don’t need to go into a bank. You don’t need to call anyone and wait for three hours listening to incredible elevator music that plays in your head for days later. You can just log in online (whilst eating a block of chocolate) and set up future transfers. Once it’s done, it’s done. The great thing is that you can up this at anytime or add to it at anytime.

Once you have achieved this $1000 or you are in a position to find $1000 easy, I want you to transfer $250 into your emergency savings account for four weeks. Do not touch it unless it is a real emergency!

Now you have a decent starter emergency fund. We need to have another look at the amount we have set up to be automatically transferred. You may be better at budgeting now or able to give up little luxuries easier, so now you want to automatic transfer. Come up with a realistic and helpful amount to contribute regularly. Your goal is gradually increase this amount to six months worth of expenses. If you are spending $600 a week you should aim to have $15,600 in your emergency fund. Remember EVERYONE IS DIFFERENT. Work out your monthly expenses. Multiply it by 6. This is your goal.

Start now!…please.