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How To Start An Emergency Fund

An emergency fund is one of those things that is crucial to good financial health, but most people don’t have. It’s estimated that 39% of Americans don’t have enough savings to cover a $1,000 unexpected expense.

I know for myself, at times, this has been true. It’s hard to admit, but I have not been the greatest saver. While I don’t spend frivolous money, I just didn’t have a higher earning salary while working as a freelancer. That was all fun and games when I was in my twenties, and I thought nothing could happen to me. But the truth is, it was stupid and reckless. Emergencies can strike anyone, at any time, and it’s financially irresponsible for us not to have some sort of fund.

Now I realize that for low-income families this can be quite a struggle. But the truth is, we need to do whatever we have to, to have some money in the bank.

Not having an emergency fund, is like jumping out of a plane without a parachute. At some point, you’re gonna hit the ground. And the truth is it’s gonna hurt!

So what is an emergency fund you ask?

Well, it’s 3-6 months worth of expenses set aside for just that, emergencies.

How can we start putting together a savings plan? First things first..

Add Up All Monthly Expenses– Start by adding up all your monthly expenses. And don’t forget anything! Things like:
1. Rent/Mortgage
2. Food Expenses
3. Car/Travel Expenses
4. Insurance Expenses (car/human, etc)
5. Utility Expenses (gas, electricity, water, garbage)
6. Phone/Cable/Internet
7. Monthly Debt- Credit cards/Loans (not mortgage)
8. Groceries
9. Other(child care, etc)

Add up all those expenses, and then x it by 3 or 6 months. This will give you an idea of what your end goal is. Don’t be alarmed, it will be a large number. They key is to start somewhere, even if it means, starting with $500 in savings.

2. Do Budget, Cut Expenses, Put Extra in Savings- Now that you’ve accumulated all your monthly expenses, it’s time to do a budget. That’s the nasty part where you pick thru your finances, see where all the money is going, and start trimming the fat. Canceling subscriptions like magazine, food, make-up, dog toys. Even try downsizing your cable, or eliminating altogether. Once you trimmed the fat, put all that money that you were spending into the emergency fund. You’d be surprised how fast it will add up!
3. Put Tax Return Into Savings– This is an obvious one I think. When you get that check back, which sometimes can be in the thousands, put it away. Instead of using it for a fancy vacation or cruise, choose a staycation at home, and put it away. If your average tax return is $3000, think how fast that will add up over a few years.
4. Find a Side Hustle– Side hustling is an awesome way to add extra cash into your life. Whether it’s becoming an Uber driver, a Virtual Assistant, babysitting, or mowing the neighbor’s grass, it all adds up. And besides, once you’ve got your emergency fund up and running, you can use that extra cash, to pay off debt. It’s a win-win!
5. Make it Hard to Access– This is probably a key to making this whole thing work. I don’t mean freezing cash in your freezer, I mean it needs to be a little tougher to access. Not in a regular account that you have daily access too. I set up a completely separate account for my emergency fund. It’s set up at an online bank only accessible by debit card and app. It’s not with my regular accounts, so I never see it. This way I don’t have to worry about getting tempted by those fancy shoes, Amazon purchases, or negligent spending. It’s actually the smartest thing I’ve done because it’s not on my radar on a daily basis. The money is there, but I don’t think of it as part of my total money. It’s separate, and that’s the way it needs to stay!

Starting an emergency fund, is honestly, critical to your well being. Whether your single or have a family, planning ahead for emergencies is so important. I’ve made a concerted effort to start with putting away a $1000 for now, while I attempt to work on eliminating my debt. I’ve been adding a small amount here and there, but I know it’s more important to pay down and off my debt before I tackle saving 3-6 months savings. This really is a personal choice. I don’t have kids, don’t own my home, and live a pretty simple life. $1000 will probably cover a lot of emergencies that I might have. I would be lying if I said that it didn’t make me nervous, but my plan for paying down my debt it working, so it’s more important to focus on it right now.

Whatever plan of action you decide on, just take some action. Even starting small with $250 or $500 is something. Don’t get stuck when a true emergency arises, be prepared, and ready for action!

26 Ways to Save on Monthly Expenses

Who wants more money? ME!!

You too? Good, you’re in the right place.

I’m always looking for places to save money. I’m not intrinsically cheap, but I do like a deal. I don’t use coupons much, but I’m always doing research on lots of stuff to find a good deal. I love the satisfaction I get from saving money. Oh and my bank account likes it too!

Here are some of my favs…

Carpool– I know this isn’t anyone’s favorite, but it saves so much money!! Oh and you can use the carpool lane, so you get to work faster. So it saves money and time! WIN!
Get Rid of Extra Car– If you have multiple cars and some are sitting, get rid of them. If one of you works at home, get rid of it. If one of you is taking transit or carpooling, get rid of it!
Public Transportation– Mass transit, its the way to go. If you live and work near a train or bus line, you’re silly for not using it. It might take a little extra time, but it saves so much. Just try it.
Refinance Home– If you haven’t thought about this, and you’ve been paying on your mortgage for a while, it’s worth checking into. A lower interest rate can save you thousands of dollars a year. Definitely worth the time to investigate it.
Consolidate Student Loans– Many of us have lots of school loans, taken out at different times, or with different banks/vendors. Check into a consolidation loan to hopefully lower your overall interest rate, and lower your payment.
Take Advantage of Balance Transfers– If you happen to see a great deal, like a 0% APR for an extended period of time, or for balance transfers, don’t be afraid to try it. Just read the small print, and make sure to close the old card. Don’t want to run it up again!
Request a Credit Card Rate Reductions– Many banks will entertain lowering your interest rate on your cards, for 2 different reasons. If you have an excellent payment history, and you’re thinking of moving accounts, many banks/institutions will lower the rate if asked. They will also entertain the idea of lowering the rate if you’re under financial hardship. This can be trickier, but many do it as a way to help lower your payment when in hardship.
Install LED Lightbulbs– While these can be more expensive, the savings are in the long haul. Lower utility rates, and no need to change for a very long time!
Install Programmable Thermostat– These can save you a ton of money. They’re relatively inexpensive and super cool. They can keep the house cool when it needs to be, and warmer when no one is home. Total money saver.
Lower Temperature on Water Heater– Most water heaters are set to 140degrees from the manufacturer. If you lower it to 120degrees, you’ll save a bunch of money on electricity.
Air Seal Home– Keeping your home sealed tight, whether you live in cold or warm climates, will save over time. Some things can be done by yourself, some need a handyman. Adding extra insulation and weather stripping will go a long way.
Cancel Gym Memberships– Just admit to yourself. You’re not using that gym membership much, if at all. I did. I was a gym rat forever, but in the last few years, I’ve just slacked off, (and gained weight, but that’s another article!) I recently started walking my new puppy every day. So guess what? After 17 years, I gave up the membership. At least for now. It hurt a bit, more pride than anything, but it’ll save me $600/year, so win-win.
Get Rid of Cable– I gave up my DirectTV account after 15 years, about 9 months ago, and it’s the best decision I could have made. I was paying $125/month for DirecTV. I switched to SlingTV and even added HBO, and my bill went down to $55/month. Quite a savings.
Cancel Magazine Subscriptions– I used to love to get US Weekly, and People, and sometimes those other rag magazines. But the truth is they’re a waste of money. Not only can you get them from the library, most of the magazine and the content, are all online now. Don’t waste your time or money on subscriptions, it’s not worth the cost.
Cook Meals at Home– This goes without saying, but do some meal planning and cook at home. It saves a ton of money. And you get to spend time with your family, on a probably much healthier meal then if you dined out.
Take Lunch to Work- So now that you’re cooking at home, just start packing that lunch, ok? It’s cheaper, a big time saver, and you’ll eat healthier. You’ll thank me later.
Buy Nonperishable Items in Bulk– Common items, like spices, and toilet paper, paper towels, etc., should all be bought in bulk. Much cheaper and they won’t go bad.
Use Coupons– I’m not a great couponer, don’t really have the patience, but if you do, you can save tons. My mom used to coupon from the Sunday paper and it still reminds me of being a kid. There are lots of deals and coupons on the internet, and you should always check online if nothing else before any major purchases. You’re bound to find a deal.
Start a Garden– I love this idea, and it’s so much fun! I don’t live in a very garden friendly area, but I can grow herbs, so I do. It’s peaceful, a great stress-reliever, and the food tastes great.
Buy Generic– Whether it’s cereal, prescription drugs, t-shirts, I always buy generic. There are certain things that I like to spend money on, like shoes, and sometimes work attire, but otherwise, I buy generic brands. Saves a ton!
Downgrade Health Insurance– This is a tough one because with the state currently of health insurance, the fact that you have any, and can afford it, is probably a blessing. I would not probably do this with a family, or someone with pending health issues, but if you’re a single, young, healthy person, this can be a great way to save money. But be very careful, because the consequences of being under-insured can be life-changing.
Change Car Insurance– I am a victim of this, I’ve had the same car insurance for like 11 years. I just recently checked other companies, because mine seemed high without any accidents and wow, was I shocked. I’m paying way to much!! Time for a change.
Raise Car Deductibles– Another way to save money is to raise your car deductibles. It really depends on the vehicle and your driving record. Also, if you’re paying on your car, the dealer/loan originator may have specific minimums that must be kept on the car. But if you’re driving an older car, and have a great record, check out this option. Don’t over insure an older vehicle, you’re just wasting money.
Reduce or Eliminate Cell Phone– Eliminating a cell phone may not be an option for many, but changing your cell phone plan can save tons. Many name brand companies, like T-Mobile, offer great plans. There are plenty of pay-as-you-go or pre-pay plans available that will work for a lot of people. Look around, you’d be surprised at the savings.
Cut/Dye Hair at Home– This has become a staple in my life. I was spending close to $250 every 8 weeks on a cut/dye job at the salon. I started by dyeing my hair at home, then progressed to cutting my hair. It’s really not that tough, and if push comes to shove, you can always just try a cheap hair cutting place for touch-ups. All in all though, even if you do it once or twice a year, it will still save lots of money.
Reduce Cigarettes/Alcohol– This is undoubtedly the hardest one. I don’t even tell someone to just cold turkey either, but tapering down, sure does help. Of course, it would probably be best to stop altogether, that’s probably not a realistic goal at first. Just try eliminating a few drinks, or a pack of cigarettes a week, and see how it goes.

I hope that even trying just a few of these things, can help you save money. All might not work for everyone, but just trying a few can certainly make a difference in your bottom line.

And think about what you can do with all that extra cash? Take a vacation. Pay down debt. Or even add to your emergency fund.

Happy Saving!