Emergency Fund: Your Lack Of One Is An Emergency

You hear the advice about emergency funds all the time. Experts say that you should have 3-6 months of expenses in an emergency fund to cover unexpected job loss, medical bills, or major home repairs.

To someone that may be living paycheck to paycheck, saving 3-6 months of expenses seems impossible, so they don’t even start to save.

If you are one of the millions of Americans with no emergency savings at all, it is time to change that starting now.

Your lack of an emergency fund is, in fact, an emergency. With no funds set aside to cover any of the myriad of things that can go wrong, you are at risk of running up debt on a credit card, paying bills late or not at all, or simply being unable to access things that you need.

Instead of being overwhelmed by thinking of the amount of money needed to fund an emergency fund covering, six months of expenses, start smaller. Make an initial goal to save $1,000 in an emergency fund.

If you are currently living paycheck to paycheck, even this small amount may seem overwhelming. But when you start to save for your future, good things start happening in the rest of your financial life.

Taking control of your money by starting a small savings account influences all the other financial decisions you make daily, and before you know it, your financial situation has improved dramatically. You just need to take this first step.

But how do you save $1,000 if you have no money left after paying your bills?

Well, that just means that it is time to be determined and creative.

Take a hard look at your budget and cut back where you can. Can you discontinue cable or lower your package to have a few extra dollars a month to put into savings?

Can you take any steps to lower your utility bills? Put any money saved directly into your emergency fund.

  • Stop all frivolous spending until you meet your $1,000 goal. No fast food, no takeaway coffee, no new clothes, and no movies.
  • Temporarily suspending all unnecessary spending will fund your savings quicker than you think.
  • Save on groceries. Spending money on food is a necessity but many people spend far more than they need to.
  • Coupons aren’t always the best use of your time to save money and often encourage you to purchase things you wouldn’t normally buy.

Instead of using your time to clip coupons, visit a discount grocery store in your area. Oftentimes the prices at these stores are significantly lower than your big supermarket.

Also, these stores typically have smaller inventories, which lead to less decision making and impulse buys on your part.

  • Work overtime. If your place of employment allows it, working overtime at your current job is a more efficient way of earning more money than working a second job.
  • Overtime wages pay more, and you will save time on travel to another job.
  • Get a second job. If your job does not allow overtime, you may want to consider taking a second job, at least temporarily, to get your small emergency fund started.

When you see the money begin to accumulate in your account, you may be motivated to continue working and increase your savings even further.

  • Sell unwanted things from your home. A garage sale is always a way to declutter your home and get a jump start on funding your savings.

While a garage sale is a perfect way to sell many items, often bigger or nicer objects can be sold on your local Facebook buy/sell page for more money than you would earn at a garage sale.

  • Get a side hustle. More flexible than a second job, many people can turn their interests and skills into a side hustle that earns extra money.

If you like working outside, try finding a few lawns to mow or landscaping jobs. If you love kids or are currently staying at home with your own kids, try babysitting as a side gig.

Check with the laws in your area, but typically if you are watching less than a certain number of children, you do not have to be licensed as a daycare provider.

Like to write? Try freelance writing. Examine what you can offer others and find a way to make that pay for you.

If you are determined and single-minded in your quest to save your first $1,000, you will likely be able to meet your goal in just a few months or less.

Once you have reached your initial goal, take the strategies that worked for you and make a new goal.

You can choose to double your goal and go for $2,000 as your next mini-goal or shoot for three months’ worth of living expenses.

 Eventually, you will want to aim for three to six months of expenses in the bank. But start small, accumulate some early wins, and keep working towards your goal.

The important thing to remember once you are successful in meeting your goal is that this is just the beginning.

When you have a safety cushion, you can then turn your focus to your other financial goals.

Perhaps you need to get out of debt, save for retirement, or for college for your kids. Whatever your financial goals are in life, you want to establish an emergency fund first.

You don’t want a car repair to derail all that you have worked for.

When you have your emergency fund in place, you will see that the sense of security you feel from being protected in an emergency will lower your stress levels and give you peace about your financial situation.

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