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How to Start An Emergency Fund For Your New House

Posted by The Paramount Team on December 30, 2016
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Why you need to start saving

Being a homeowner – especially a new one – comes with a lot of unexpected expenses. Things break, leak, and just straight up stop working. But that’s why we call it an emergency fund. These expenses come out of nowhere and are usually pretty big, meaning you need a nest egg to rely on.

Of course, you have homeowner’s insurance, but don’t rely on that completely. If you have a high deductible you could still need a good amount of cash on hand. And if your expense fall outside of your insurance coverage, you’ll be glad you started saving.

What you should spend your home emergency fund on

Well, the obvious answer is: home repairs. But here are some examples of what you can spend your emergency fund on:

  • Replacing or repairing a roof
  • Buying a new hot water heater
  • Fixing your HVAC system
  • Remodeling your kitchen
  • Repainting your house–inside or outside
  • Fixing a busted foundation
  • Dealing with flooding
  • Emptying your septic tank

Of course, there are many more ways you can spend your emergency fund that we could never list here. That’s the thing about emergencies – they’re hard to predict. So when you come home to find out that your 12-year-old accidentally left the bath running for 3 hours, you’ll be ok because you have an emergency fund.

How much you should save

Once you decide to start an emergency find, the first thing you will need to decide is how much you should save.

There is no correct answer for this. Some financial experts say 1% of your home’s value, while others say 3-8 months of your salary.

Whatever number you pick, it’s important that you choose a target goal that feels possible to you. If you choose an exorbitant number, your brain will automatically disregard the possibility of ever achieving it, and you won’t save at all. So pick something you know you can hit eventually.

Once you calculate how much you can and should save based on your salary, expenses, and home cost, break that big number down into smaller numbers. Have different goals – weekly, monthly, even yearly. When you hit those goals, you’ll know you’re well on your way to having a great little safety egg. And every time you reach a weekly or monthly goal, you’ll get excited and encouraged to keep saving. Go you!

Tips for saving

Deciding to save is the easy part. Actually putting away a little money every week is the hard part. But we have some tips to make it a little easier:


  • Put it somewhere safe: You have two choices: you can put it somewhere liquid, like a savings account, so you can access the money easily if you need it. Or you can put it somewhere with a high interest rate that isn’t easily accessible so you aren’t tempted to use it unnecessarily, You could put it in a CD or mutual fund. Just make sure you know how to access it in an emergency.
  • Treat it like a bill: Contributing to your emergency savings account isn’t a choice, so don’t think of it like that. Treat it like a bill that you have to pay every month. You could even set up an automatic transfer into your savings account every month.
  • Celebrate the accomplishments: Starting and keeping up a savings account can be tough. It’s a long process so to keep your spirits up you need to celebrate your accomplishments! When you reach your goals, whether it’s by amount of money you’ve saved or you’ve saved up for a year, you should be proud of what you’ve accomplished.

Start Building Your Nest Egg

Now you have all the advice you need to get started! So start small if you have to, but get saving now. It may not feel like much at the time, but in a year’s time you’ll be so glad you started! And even if you never use your emergency fund, you can always use it when you want to upgrade your home or buy a new one!