It’s easy to put off saving up an emergency fund. $20 here and $20 there can go towards so many things, but it’s important to start building up your emergency fun so you’re prepared when disaster strikes.
WHAT IS AN EMERGENCY FUND & WHY DO YOU NEED ONE
An emergency fund is money you have saved up for emergencies. Seems obvious, right? But what exactly is an emergency? It’s such a subjective word that means different things to different people.
An emergency fund is money you need when your central air dies in your house in the middle of summer. An emergency fund is a reserve of your monthly income you have saved if you find yourself without a job. An emergency fund is there to help you out when you vehicle breaks down.
It’s an amount of money that will vary, and though you’ll likely want to have more than $1,000 saved, it’s the perfect place to start and a fantastic starting goal to build your emergency fund.
QUICK WAYS TO SAVE
There are a number of ways you can quickly start saving money towards you emergency fund, but the number one thing you need to do is this: Make saving a priority.
It’s that simple. The concept, that is. The act of making saving a priority may require a bit of practice until it becomes habit, but once you see yourself saving you’ll feel motivated to keep going.
TIP: Check out these 25 quick ways to save money!
To jumpstart your saving consider these quick and easy ideas:
Save your change
I honestly can’t remember the last time I dug for change when paying for something. Okay, well outside of for a toll booth on a road trip or a parking meter. But separate from that, I never use change. And having it is a pain. Saving change is a no brainer because you can dump it in a jar, save it up, and suddenly you’re passively saving money without even trying.
I just invested in this digital coin jar. Right now we have a pint glass awkwardly taking up room in our storage room but it’s full, there’s change hidden in random places, and I’m excited about watching the savings grow with the digital counter.
Cancel unused subscriptions and put that money into your fund
Inventory your monthly, quarterly, and yearly subscriptions and take an honest look at what you use and what you can cut. True story: A few months ago I did a breakdown of what my monthly subscriptions were, and I was stunned to learn that I had over $500 a month that was automatically being charged to me!
Between random app subscriptions, a monthly wine club, subscriptions to help me keep this blog up and running, and miscellaneous payments for items such as my password manager, it all added up quicker than I even knew.
Once I did a breakdown of what I could cut and got those subscriptions cancelled I turned around took that money, money that was already coming out of my account, and moved it into savings. I was already fine without it each month, but instead of it being paid towards something I wasn’t using I turned it into an extra opportunity to save.
Save your tax return
Of course saving your tax return isn’t something you can do any time during the year, but when tax season comes it’s a quick way to make a big dent in saving an emergency fund. Take all or part of your tax return next season and move it right into your savings. It’s not a part of your monthly income and you don’t need it.
Arguably the most efficient way to save for your emergency fund is to budget for it. Budgets are key to your financial success; whether you’re paying your bills, chipping away at your debt, or saving, a budget will keep you in check.
To use your budget to help you save for your emergency fund than be sure to include it as a line item in your budget. If you leave it as an afterthought than you’re likely to spend that money on something else. You have plan for it.
TIP: Grab my FREE budgeting workbook and get started saving for your emergency fund and much more!
TRACK YOUR SAVINGS
Tracking what you’ve saved is fun and inspiring! Seeing the forward progress is fantastic motivation to keep saving, and I’ve created a free printable tracking sheet that can download and start using right away.
There are a couple different ways you can track your savings.
The first is that you can use the row to track your progress towards every $100 dollars, moving onto the next row once you’ve got each $100 saved.
The other way is to wait until you have your first $100 saved and then check it off, like you would an item on your to-do list.
However you choose to track saving for an emergency fund, seeing yourself move down a row to the next hundred will be incredibly motivating. You’ll have confidence in your ability to save, and you should because you can do this!
WHAT TO DO AFTER YOU’VE SAVED $1,000
So you’ve officially saved your first $1,000 – congratulations! But now what? Simply put – you keep saving. $1,000 will bring you a lot of relief when life happens, but it may not be enough, so you keep saving.
Put your funds into a high-yield savings account
So where do you put your first $1,000? You may not feel comfortable with that much cash lying around (and if you do, please please please get yourself a small safe and at least put it in there!), so consider opening a high-yield savings account.
Assess what worked and what didn’t
First, give yourself a pat on the back for making it to your first $1,000! That’s such a great milestone, and you did something right to get yourself there.
But growth is always key! What worked – was it budgeting? Did you automatically take that money out and stash it away, or did you find yourself spending that money on something else? Ask yourself the hard questions, then solution.
Personally, I have a savings account and I refuse to have an ATM card for it. I transfer the money I have planned to save into it immediately on the morning of payday. It’s accounted for in my budget and then it’s out of sight, out of mind, and I have no instant access to it when shopping or having drinks.
I also started saving cash from selling items and stashing it in one of my emergency savings envelopes (sign up and grab your free envelopes here!). There’s no right or wrong way, and you can diversify how you save if that’s what you want to do.
Set new savings goals
Finally, it’s time to start thinking about what your next savings goals are. What number are you working towards? Can you put away an extra $20/week? Can you trim off any excess spending in one area and put it towards your emergency fund savings?