Most people are familiar with an emergency fund– a one to six month supply of readily available cash in case of emergency, job loss, great need, etc. It’s usually the first step toward financial stability.
But have you ever thought of having a donation emergency fund?
A Donation Emergency Fund is a one to six month supply of readily available cash in case of emergency, job loss, great need, etc- but in this case, it’s not for you, it’s for others.
Imagine if fellow Americans were rocked by a hurricane, a friend lost their house to a fire, or people in Japan suffered from a catastrophic nuclear disaster, and you didn’t have to choose between paying your own bills and making a life-changing donation. In fact, instead of nothing or just a $10 text donation, you could quickly make a donation of $100 or even $1,000 without having to think about it. Interested? Here’s how to start.
STEP 1: Set aside some money in a SEPARATE account. Do not keep this money in your regular checking account or other saving account. The temptation to use it for regular expenses is too much for most people. Make sure the account is one from which you can write a check, or use to donate online. Although they’re not paying much now, our family decided to use a money market account so that the Donation Emergency Fund itself would grow. BankRate.com has a list of current interest rates on money market accounts.
STEP 2: Grow your Donation Emergency Fund– Just like a normal emergency fund, you want to have 3 to 6 months (or more) of what you’d normally donate to charity. If the median US household income is $50,000, and you donate 10% of earnings, that puts a one month Donation Emergency Fund at about $400, and a ‘fully stocked’ six month Donation Emergency Fund at $2,500.
STEP 3: Replenish Your Donation Emergency Fund– Emergencies will come up, and you will use this fund- just make sure to put back what you take out so that you’re ready for next time. And don’t stop donating to your church and charities you support on a monthly basis. This is something you have above and beyond for times of great need.
Having a Donation Emergency Fund is a very freeing thing. When Hurricane Sandy hit, we didn’t even have to go and check what bills were due that week. We were just able to give. When friends who were missionaries in a country that began to fall into political upheaval needed to buy plane tickets to get home quickly and safely, we were able to give. Make sure to start yours today.
Are you inspired to start your own Donation Emergency Fund? Let me know below!