Divemedic, writing at Area Ocho, has produced a superb analysis of why you need to put money away in a "rainy day" or emergency fund. It's so good, and so close to my own thinking, that I'm not going to excerpt much of it at all, except for this teaser.
One of the things that I have always blogged about is being ready for disasters. A disaster that involves the collapse of society is the one that preppers seem to find the most “sexy” and they spend their time planning on it- stockpiling guns, ammo, food, and the like. The thing with that is, it is also the disaster that we are least likely to experience.
The most likely disaster that we are likely to affect is a personal one. A disaster that affects just you, or your family. A personal disaster may be something as small as a flat tire, or as personally destructive as cancer, or simply being laid off from your job. We cannot know what that disaster will be, but there is a pretty good chance that the best way to fix it will be… money.
. . .
That’s why it amazes me that 57% of Americans can’t even deal with an emergency that would cost them $1,000. Sure, stockpiling food, ammo, or some other piece of cool gear is more fun, but money is going to be your friend in most disasters at some point. Having $1000 in emergency cash is going to help you out of more disasters than that new ACOG or that second 1911.
Without previously knowing his views, my wife and I have followed almost exactly the "recipe" he recommends for building up our reserve fund. The only difference is that we can't afford much in the way of gold; we're not that well off! However, we try to maintain a couple of months' expenses in cash or our bank accounts, plus more in the form of silver coins that are securely stored out of harm's way. There's also the value of our emergency preparedness supplies; if we suddenly found ourselves destitute, we could eat for more than a week or two out of our stockpile. The combination means that if everything went pear-shaped for us, and we both lost our incomes, we could survive for some time without hurting too badly.
(As I mentioned last Tuesday, that cash reserve came in handy when I found that our emergency water filtration supplies had been disabled by chemical interactions. I was able to order replacements at once, and have them here within a couple of days. Given how critically important potable water is to our health and safety, it was very comforting to be able to do that.)
Even if you can only afford a week's emergency financial reserve to start with, it's well worth putting it aside; and, over the course of several years, it can grow until you have a couple of months' worth. Go read what Divemedic has to say, and learn from him. It's good stuff.