We should all have an emergency fund.
The amount for this fund varies, depending on who you ask.
I believe, if you are self-employed, you should aim for six month’s worth of expenses. If you are permanently employed, I suggest the equivalent of three month’s income. Below are five tips you can use to start building your emergency fund:
1) 𝐂𝐫𝐞𝐚𝐭𝐞 𝐚 𝐬𝐩𝐚𝐜𝐞 𝐟𝐨𝐫 𝐢𝐭.
Whether it is a separate account or an envelope or a jar, create space for your emergency fund.
2) 𝐒𝐞𝐭 𝐚 𝐬𝐦𝐚𝐥𝐥 𝐠𝐨𝐚𝐥.
While the ideal amount for an emergency fund is about the equivalent to six month’s income, this can seem daunting. Break up that goal into smaller chunks. Start with a goal to save $500 and when you get to that goal, aim for $1,000.
3) 𝐂𝐮𝐭 𝐛𝐚𝐜𝐤 𝐨𝐧 𝐬𝐨𝐦𝐞 𝐨𝐟 𝐲𝐨𝐮𝐫 𝐬𝐩𝐞𝐧𝐝𝐢𝐧𝐠.
I’m not suggesting to stop enjoying your money. Continue to enjoy your money, after all you work hard for it but, try and cut back on at least one item. e.g. cut back a bit on your Amazon shopping. Or, if you buy take out four times a week, reduce that to three times a week.
4) 𝐒𝐞𝐥𝐥 𝐬𝐨𝐦𝐞𝐭𝐡𝐢𝐧𝐠 𝐭𝐡𝐚𝐭 𝐢𝐬 𝐠𝐚𝐭𝐡𝐞𝐫𝐢𝐧𝐠 𝐝𝐮𝐬𝐭.
We all have something sitting in the garage or in our closet or in the back shed that we no longer need or use. Why not sell it and make some money? I have a client who sold some shoes and made about $700. Another client sold a couple of bikes that were hanging in her garage and she got $300 to start her emergency fund.
5) 𝐆𝐞𝐭 𝐚 𝐨𝐧𝐞-𝐨𝐟𝐟 𝐣𝐨𝐛 𝐨𝐫 𝐨𝐝𝐝 𝐣𝐨𝐛𝐬 𝐢𝐧 𝐚𝐝𝐝𝐢𝐭𝐢𝐨𝐧 𝐭𝐨 𝐲𝐨𝐮𝐫 𝐫𝐞𝐠𝐮𝐥𝐚𝐫 𝐢𝐧𝐜𝐨𝐦𝐞.
I have a client who started doing dog walking as a way to increase her income. Another client started running errands for people who didn’t have the time or were unable to, due to illness or disability.
Remember, the money in this fund is for emergencies only. Please reach out if you have any questions.