In our last blog post, we talked about how important it is to have an emergency fund set aside for life’s little surprises. Having an emergency fund affords you freedom and peace of mind which every badass lady needs!
Now, let’s take a look at how we can make this happen.
Calculate Your Savings Need
The goal is to have at least 6 months of expenses saved in your emergency fund. Don’t know how much that is? Take a minute (Like NOW!) and figure it out. Add all of your expenses (housing expenses + car expenses + utilities + gas + groceries + childcare+ any other required expenses) and times that by 6. That number is your goal. Write it down really big and circle it a few times (no really, write it down REALLY big and circle it).
Now take a look at your current savings situation. Do you have enough liquid (cash or easily converted to cash) savings to cover that? If so, awesome job lady! Pour yourself a glass of wine and go buy yourself that beautiful pair of heels you have been eyeing. If you are like most of us, you don’t have that much set away which means you have a little work to do. Don’t worry, we are here to help!
Open Your Emergency Fund
Many of us have our savings accounts where we have our checking account. Horrible idea. Humans are not very disciplined creatures (or at least I’m not). If you see it, you will spend it. For this reason, open your savings account at the most inconvenient bank in the world. Find the bank that your ex works at open it there (or where an equally repulsive person works). Make it absolutely tortuous for yourself to go there and make a withdrawal. The goal is to put money in and never take money out.
You will want to open up a basic bare-bones savings accounts. No online banking, no debit card, no shiny new toaster. Most banks have a minimum opening deposit which is typically around $25 so make sure to bring that with you. Also, be prepared to pay a small monthly service fee until you are able to meet the minimum balance threshold. No worries, you will be able to avoid that in no time!
4 Quick Ways to Fund your Emergency Fund
1. Pay Yourself First
The very first check you should write on payday is to yourself. Figure out how much you can comfortably set aside and do so. Even if it is just a few dollars a paycheck, it is better than nothing and gets you in the habit of saving.
2. Cut One Unnecessary Expense
Another quick-hit will be cutting one cost immediately. Almost all of us have areas where we can cut expenses. It could be your daily Starbucks run, sushi with the girls, smoking, etc. Find just one thing that you can eliminate and immediately divert that money into your savings account. Finally. every time you would typically purchase a $5 Latte, slip that money into an envelope and deposit asap.
3. No-Spend Month
I never said it was going to be pretty, but I do promise it will be worth it. Now, this is going to be painful at first. Declare a no-spend month. What is this nonsense, you ask? Essentially a no-spend month cuts out all unnecessary expenditures. Thus, you can still spend on necessities but you essentially cut everything else out. This is an awesome way to not only jump-start your savings but also to reset your mindset on spending. You really learn the difference between a want and need. Check out Darling CEO’s Pinterest page for more info!
4. Start a Side Hustle
Finally, I am a huge believer that everyone should have more than one source of income. There are a ton of resources out there to help you identify what the best side hustle is for you. Currently, my favorite is the Side Hustle School podcast with Chris Guillebeau (Side Hustle School). You will get a ton of ideas and best practices from this short daily podcast (it’s typically 10 minutes or less so it is very easy to fit in you day!)
Now that you know why and how to start an emergency fund, go ahead and start right away! Your future self will thank you.
Leave a comment below. What steps do you plan on taking first? What struggles do you foresee in getting your emergency fund started? I would love to hear and see if I can help you out!
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