STEP 3: Financial Reserve – Emergency Cash For Real Emergencies

Note: – STEPS 1, 2, and 3 can be worked on simultaneously. Then move to STEP 4)
STEP 3: Financial Reserve
“Establish a financial reserve by saving a little money each week and gradually increasing it to a reasonable amount.”

“We encourage you wherever you may live in the world to prepare for adversity by looking to the condition of your finances. We urge you to be modest in your expenditures; discipline yourselves in your purchases to avoid debt. . . . If you have paid your debts and have a financial reserve, even though it be small, you and your family will feel more secure and enjoy greater peace in your hearts.” —The First Presidency, All Is Safely Gathered In: Family Finances, Feb. 2007, 1

President Gordon B. Hinckley has taught: “Set your houses in order. If you have paid your debts, if you have a reserve, even though it be small, then should storms howl about your head, you will have shelter for your wives and children and peace in your hearts” (“To the Boys and to the Men,Ensign, Nov. 1998, 54).

Putting aside emergency cash is “an investment against the unexpected – situations where everything else has failed and I have no other options to turn to.” TheSimple

Emergency Scenario #1: You just went through a major disaster. You can’t leave the city and need some supplies. The power is out and the grocery store isn’t accepting ATM or credit cards.

Emergency Scenario #2: You’ve suddenly been asked to evacuate because of a fire on the mountain near your home. You hope you can eventually drive to your sister’s out of town, but suddenly the roads are congested. Everything is at a standstill and you could only make it across town. You need gas, food and water, and possibly a hotel room.

Emergency Scenario #3: Your youngest child is very ill. You need some medication from the pharmacist, but you left your wallet at work which is about 30 miles away.

Emergency Cash Tips:
Put it in several locations
Keep it safe from water and heat damage
Nothing larger than a $10 bill (You could pay $5 for a bottle of water in an emergency.)
Keep about $20 to $100 hidden in your car
Keep about $20 to $50 in your wallet in small bills
Keep minimum $100 per person at home
Dave Ramsey, author of “The Total Money Makeover,” recommends you start with $1000.
Consider how you might use it in 72 hours – food, hotel, gas, etc.
Convert collected coins to smaller bills. It needs to be accessible, but don’t use it to buy your lunch.
Hide it in unobvious locations, but make sure your trusted older kids know where it is. You may not be home when they need it.


“I was just reading your great blog and you mentioned to keep emergency cash. I thought I would share something that works for me. Whenever we tried to have an emergency stash, I would always end up using it for lunch money or last minute gifts, etc. So I picked up some of those small coin sorter banks that are always around for Father’s Day and Christmas. We all empty our loose change into them each night. We have over $400–all in change. I’m not tempted to “borrow” it’s too much of a hassle. As we fill a bank, we put it down in the food storage room. They are small, so they are not too heavy for us to grab when in need. Thanks for all you do.” DS

Articles to Read:
Family Finances
Safely Gathered in: Keeping Cash at Home

After you’ve completed steps 1, 2 and 3, you can go on to STEP 4: Longer-Term Supply

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