If you are trying to save money, then you’ll probably hear about the importance of having an emergency fund. An emergency fund is just that – a fund set aside for emergencies only. You never know when you’ll need to use the emergency fund (your car breaks down, your AC goes out, etc.) Whatever the reason, the money will be there if you set it aside for a rainy day. Many experts will say that it’s a good idea to save at least $1,000 in an emergency fund if you are starting out. Then, once that fund is set and you’ve paid off your debts, you can always add to it and create a solid emergency fund of up to 3-6 months expenses.
Funding your emergency fund doesn’t have to be difficult! Here are a few ways to build your emergency fund.
1. Earn extra income.
Find a second job or work a few side jobs. Work a few extra nights a week and add the extra money to your fund. You can even try babysitting, mowing lawns, washing cars, etc. Here’s a list of 5 Ways to Earn Extra Cash.
2. Sell your belongings.
Go around your home and start finding items that you and your family can live without. You’d be surprised with how much you can find. Then, either sell those items at a yard sale, online through eBay, or consign the items.
3. Avoid Eating at Restaurants.
If you are in the habit of eating fast food on a regular basis, I challenge you to add up your restaurant expenses for one month. Then, try to cut that amount in half, or avoid eating at restaurants at all. Here are a few articles on dining out if you’d like to save on dining out.
4. Set up automatic payments.
Treat funds going into an emergency fund “like a bill” and set up automatic payments from your checking account. You don’t have to add a lot, but start small, maybe $25 each month. Set the payments up automatically and have it go to your savings account each month. You can increase this amount if you’d like until your emergency fund is where you want it to be.
5. Cut your grocery bill significantly.
Food can be one of the highest expenses in your household. Create a budget for food and stick to it. Most food budgets I’ve seen run around $200-$400 per month for a family of 4. Use coupons to save even more at the grocery store.
6. Shop at thrift stores instead of retail stores.
Thrift stores are a great place to find items you may need or want. Instead of paying full price for items at a retail store, shop at thrift stores. I actually buy the majority of my children’s clothes at thrifts stores, paying only $1.79 per item. This beats paying $10-$15 per item or more at the mall or other retail stores!
7. Start a No Spend Challenge.
Buy only the things you truly need during a no spend challenge. Here’s a list of free activities to take advantage of during a no spend challenge.
Having an emergency fund in place can certainly help on a “rainy day.” Start as soon as you can to get your emergency fund in place.
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