10 Ways To Build An Emergency Fund
No one will argue the importance of having an emergency fund, but you would be surprised at how many families don’t have one, relying instead on the old credit card. How dangerous is that? For most Americans all it would take is one missed paycheck to push them over the edge. Here are 10 simple ways to start building that “nest egg” emergency fund now.
As you read this you may think of others that you can use. Or, you may argue that little things (like pocket change in #4) wouldn’t build very quickly. And that’s true. But that combined with the others will add up fast, and the most important thing is to do something, be prepared – and stay out of debt.
Start Saving Something Today
· It’s not the amount that matters but the discipline of doing it. Even on a tight budget a small amount adds up before you know it. Depending on the size of your family, skipping one meal out per week and putting that amount into a savings account could equal $150 or more per month in your emergency fund.
Treat Saving As A Bill
· Consider having a set amount transferred automatically from your checking account to your savings each week for your emergency fund. If you do your banking online you can transfer it yourself. But it’s important that you discipline yourself that once it’s in savings it stays in savings. Even transferring $20 a week is $80 a month and $1,040 a year. That’s more than enough to repair your car or pay for that unexpected doctors bill.
Open A Christmas Club Account Where You Bank
· When our kids were little we did this. It was a tremendous help at Christmas when money always seemed to be in short supply. While Christmas isn’t technically something you need an “emergency fund” for, having something saved up ahead of time will keep you from using those high interest credit cards during the holidays.
Empty Your Pockets Or Purse Every Night Into A Jar On Your Dresser
· I’ve used this for years and I don’t miss the change. In a few months I’d saved up about $300! You can easily save about $1,000 a year using this method (I’m not kidding). Use this for your emergency fund OR for family trips to theme parks, etc.
If everyone contributes their spare cash each night you can quickly save enough money for a day-trip for the family to somewhere fun.
The best way to get the cash to add up fast is to make a point to NEVER use exact change. This way you’re always getting change back at the store or fast food place, then each night dump it in the jar! You can easily save up $1,000 a year if you don’t take any money from it.
Get Cash Back From The Market When You Use Your Debit Card
· When you pay for your groceries take out $5 in quarters and put it in the jar. Back when I was an “apartment dweller” I had to use quarters for laundry. So instead of getting one roll I’d buy two and put all the coins in my jar. Then I’d only use the quarters as I needed them for laundry and keep for an emergency fund!
I used the cash several times to buy groceries or gas in my car when I didn’t have enough left over from my paycheck. Believe me, you don’t miss the $5. You do however have to fight temptation to raid the jar. Be strong and don’t give in. You will be glad you did when something comes up and you really do need to dip into the “emergency fund!”
You Just Paid Off A Big Debt Like A Car Loan
· Keep making those payments, this time to yourself. If you don’t have any other debts looming this is a great way to save up money fast for an emergency fund. If you owe a balance on a credit card though, you’re better off making at least a portion of the old car payment to the credit card company and really blasting through the debt.
Getting A Big Tax Refund?
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· Put as much of the money into savings the minute it arrives! before temptation gets the better of you.
Give Up Cigarettes – Or Even Cut Your Habit In Half
· Don’t say you can’t do it. Be disciplined, you will be glad you did and so will your family. If you are fond of beer, the same holds true. Just put what you are not spending into the old emergency fund – or better yet – add that amount each week to your jar so you can actually see your savings growing.
Buy U.S. Savings Bonds
· Bonds yield more interest than the money earns either in the jar or most regular savings. They are easy to buy and a great way keep yourself from the temptation of taking the money out for other things. If you give in to temptation easily then this is a good way to save up an emergency fund. Having to physically walk into the bank to cash in the bonds makes you think twice about whether the reason you are taking the money out is a true “emergency” or just a “want.”
Involve The Whole Family In Saving
· Plan a treat for the family when you reach a goal. Make the treat something everyone will enjoy. That way they won’t think of it a burden to continue saving. AND you’ll be giving your children some great tools for their future as well. A trip to a theme park when you reach $500 is a great treat and you won’t feel the pinch in your wallet or be increasing your credit card debt to have a great family day out!
The important thing about building an emergency fund is to START. For help on budgeting or starting an emergency fund try using our simple budget worksheet and see exactly where your money goes each month. Just click on the link above.
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