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8 Ways To Build An Emergency Fund.

The government shutdown is over (for now) but it gave us all a moment or two to think about what it would be like to go without pay for a period of time. The shutdown highlighted how few Americans have the kind of savings experts say they need in order to handle a crisis. Forty percent of the federal employees laid off didn’t have savings which seems like a lot, yet Experian reports that 78% of Americans live paycheck to paycheck and 69% have little or nothing saved. $6,375 is the average credit card debt and the average interest rate is over 17%. These numbers are grim and tell us that folks obviously need more financial education. We simply need to get back to the basics.

Picture of a couple saving money with a piggy bank.

Think back to every “emergency” that you have ever had in your life. I use the quotes because we tend to think that everything is an emergency when money is tight in our lives, but in reality, very few things are truly emergencies. Confusing wants with needs is one of the biggest errors that we make and one reason that many are in debt to start with. When you think about all of the true emergencies that crop up, having $1,000 readily available will cover pretty much all of them. That’s why it is Dave Ramsey’s Baby Step 1. There are very few emergencies that will cost more than that, and those emergencies that do can often be put on installments and lumped into all of the other debts that you tackle with your debt snowball in the next baby step.

Emergencies aside, many people want to invest, start a Roth or 401(k) yet they don’t have even $1,000 in savings. This is a problem, but a solvable one. It may seem like a tall task, but you can make it happen – there are plenty of ways to quickly earn the money.  Let’s look at several ways you can start saving your emergency fund:

1) Sell your non-essentials

There is a ton of hype these days to decluttering and only hanging on to essential items that bring you joy. Why not make this a money making venture in addition to clearing space? With multiple online platforms available to sell stuff like LetGo, craigslist, and FaceBook Marketplace – your buyers are out there and waiting for your stuff. You’d be amazed how quickly twenty $10 items sell and put you 20% toward your goal.

2) Get creative with cable

Cable television companies report average spending per subscriber of about $85 a month and satellite TV providers are even higher, averaging $100 a month. There are several ways to cut your costs without missing out entirely on your favorite programs. Start by assessing what you watch and get rid of any extras you’re paying for but not watching. Downsizing your plan, avoiding long term contracts and carefully examining extra fees will help reduce your monthly cable bill, and consider ditching it all together and opt for less expensive streaming services.

3) Start a change jar

It may sound silly, but even unemployed grade schoolers save enough change to purchase items on their wish lists, and so can you. Whenever you have spare change, toss it in a piggy bank and over time it builds up and adds to your fund.

4) Identify habits you can break

One of the main reasons habits get such a bad rap is because they are costly and often in more ways than one. Is it your daily half-caff soy latte, alcohol or smoking, or maybe shoes and purses that can get the boot? While $4 a day doesn’t sound like much, if you stash it away instead, that’s nearly $250 in just two months.

5) Carpool often

Sharing your commute to work with a co-worker (or two) or taking turns driving kids to events, or even driving together with friends to activities is a super smart way to keep more money in your bank instead of your gas tank. And think about other options like public transportation, scooters, bicycles and walking. Getting clever on ride sharing or other alternatives will save you a ton of money in the long run.

6) Curb your restaurant frequency

Let’s face it, Americans eat out a lot – some dine out even more than they eat in their own home. Making your own meals could save you hundreds each year. This goes for lunches as well – pack a lunch and watch the money start adding up!

7) Go for used instead of new

This doesn’t necessarily need to push you outside your comfort zone, there are many items we purchase where slightly used is good enough. Think about something simple like a magnifying glass so Johnnie can examine her bug collection a little closer. Used will do. Visit resale shops, check out craigslist, LetGo, FaceBook Marketplace and Ebay and see what’s there before you pay full price in a retail store.

8) Consider a second job

Taking on second job for a few hours a week can be temporary and yet one of the fastest ways to build your fund. Think about things you love to do: walking dogs, babysitting kids, working out, cleaning and organizing, building things…all of these are opportunities to make extra money. Who knows, maybe you will enjoy it so much it won’t even seem like a job, but more like a creative outlet of a passion of yours that you also get paid for!

Taking action today immediately gets you closer to building a safety net that feels comfortable to you. The thing about emergency money, more is always better. You never know what may happen in the near future, good or bad, but you can be better prepared and financially stable enough to handle it. Once you have that solid foundation, more investment opportunities are available to you as well.

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