5 Ways to Build Your Emergency Fund
Do you ever feel daunted by the task of building up your emergency fund? The recommended “fully stocked” emergency fund is 3-6 months of living expenses for your entire family. If you don’t have a lot of extra money, that can be a big undertaking. Here are a few practical ways you can build up your emergency fund without sacrificing your sanity.
First things first, if you don’t have a lot of extra income to save up consistently, it’s time to cut expenses. If you are serious about building your emergency fund, you will have to make some sacrifices to get it to where you want it to be. Making a budget and sticking to it will help you find areas where you can cut back and still be able to save money for a rainy day.
Setting a weekly or monthly emergency fund savings goal is a great way to break down the total amount you want to save into a tangible, realistic target. If you are overwhelmed with the thought of having to save 3-6 months worth of expenses, then this strategy will work well for you. Take your overall savings goal amount and divide it by 12. Is that divided amount a reasonable amount you can save in one month? If not, break it up further. By breaking it up into sizeable chunks, you will be able to systematically meet your goal over time and not worry about how you are going to save such a large amount of money. Any goal can seem attainable when you sort it out over time.
Another way to save money quickly is to make more of it. Is there some way you can get a side hustle to make a bit more money each month? Do you have a skill that can be monetized on the side? Maybe you can get a part-time job temporarily until your goal is met. If you are serious about reaching your savings goals for your emergency fund and cutting back expenses isn’t really getting you anywhere, it might be time to make a little extra. All the money that you make from this side job should go straight into the emergency fund. Don’t use it for anything else until you reach your savings goals. This approach can expedite your emergency fund status to “fully stocked” in no time!
Do you pay for a lot of things in cash? If so, you probably have a lot of change and dollar bills floating around your wallet, purse or pockets at any given time. Next time you find yourself with lots of extra pocket change, dump them all into a jar. Once the jar is full, deposit that money into your emergency fund. While this approach to saving won’t make you rich quick, it still will help you along the way. Use this savings method in addition to some of the others to really get your emergency fund in place quickly.
Do you get a sizable tax refund every year? If so, put all of your refund into your emergency fund. For some people, that could equal almost one month of expenses all at once! Putting your tax refund into your emergency fund can really give you the quick boost you need to keep you going on your savings journey.
Building your emergency fund doesn’t have to be a chore. Watching your savings account grow can actually be fun when you are fully invested in making it happen. If you just take some time and employ these few tips, your emergency fund will be fully stocked and your peace of mind will be worth all the work.
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