After all that’s happened in the last two months, we’ve all seen first (or at least second) hand why an emergency fund is so important. It’s a buffer against pay reduction or job loss, it can help to cover unexpected medical bills, it can give you a little peace of mind, and more.
Still, even though we know WHY we need one, many of us don’t have it. According to the Federal Reserve, 40% of Americans couldn’t cover a $400 emergency expense without selling something or going into debt. Obviously, the time to start saving isn’t when you actually need the money. These ideas can help you get started today. I’ve intentionally put this list in order from things that are easiest to do to those that are hardest. Work through the list in this order until you reach your goal:
Stash Your Windfalls: Still have some stimulus check money lying around? Have an income or property tax refund on the way? Receive cash for your birthday? Funnel it all (or as much as you can) into your savings fund.
Company Benefits: Take a look at ALL of your company’s benefits to see if there are discounts you haven’t taken advantage of yet (like on your cell phone service or entertainment), or lower-cost ways to access services you currently use (like having your health insurance cover mental health appointments or having a generic version of your prescription delivered to your home). Remember to tally up any money you’ll be saving and actually put that money into your savings account.
Sell Something: No matter how small your home is, you likely still have things you don’t use that you could sell — furniture, art, books, collectibles. When we moved last year, we had great luck selling items on Facebook marketplace. Looking for a way to sell those old clothes? Use Thred Up.
Use Credit Card Rewards: Have a credit card that earns points, miles, or cashback? Use them to buy something you already planned to purchase and then pocket the money you would have spent into your savings.
Treat Yo’self (Twice): Some days you deserve a pick-me-up (like a frappuccino, takeout, or a new book) … just be sure to match the purchase amount with a contribution to your savings account.
Pantry Challenge: Challenge yourself to go a week or two without buying anything from the grocery store. Clean out the items from the back of your fridge, bottom of your freezer, and dusty old corners of your pantry. Put your regular grocery spending for that week (or two) into your savings.
Change Up Your Gift-Giving: Instead of buying something for a loved one for a birthday, offer them your time or labor. Babysit their kids (via FaceTime) so they can get a night off. Do their yard work. Pick-up and deliver their groceries. Then, stash what you normally would have spent on their gift in your savings account.
Put Subscriptions on Hold: Pause your streaming services, gym memberships, and magazines until you reach your savings goals. Find you have subscriptions you aren’t using? Cancel those.
Pandemic Savings: Depending on your situation, you may have saved money in certain areas of your budget during the pandemic. You’ve likely been eating out, traveling, and going out less. Figure out how much you actually saved by staying home.
Recurring Savings Deposit: This is a critical step to take, especially if you’re looking to build up your savings over time. Find an amount that you can contribute to savings on a regular basis — preferably right after your paycheck comes in. I started contributing $25/month when I was graduate school, and together my husband and I have slowly built that up to $200/month for our emergency savings fund. Even if you’re starting small, you’ll be amazed at how that contribution can really grow over time.
Go On an Online Shopping Fast: Put a hold on all online shopping until you meet your goal. Pro tip: Unsubscribe to promotional emails to reduce temptation.
Track Your Spending: Ever wonder where your paycheck actually goes? Track your spending and see where each and every dollar goes. This is a great way to find areas to save you may not have even considered before.
Renegotiate Bills: It may take a few hours of work, but this can save you some serious cash. Call all of the services you use (internet, cable, streaming, utilities, etc.) to see if there are any discounts you are eligible for or if there’s a way you could reduce your costs while still getting what you need.
Boost Your Income: Starting a side hustle can be a game changer in terms of bringing in extra recurring income. Check out these ideas from NerdWallet.
It’s important to keep this money stashed away in a separate account — preferably one that isn’t immediately connected to your checking account so you aren’t tempted to access it for non-emergencies. You’ll also want to be very intentional about actually depositing money you’ve saved into this account as soon as you can … it’s too easy for small amounts to disappear into everyday spending. And remember to check in on this account occasionally so you can feel good about the progress you’re making.
This month in Date Night Club, we’re digging into why emergency savings are so important with an icebreaker question and thought-provoking activity. Plus, I’ll help you apply what you’ve learned to your own financial life. Ready to join? Stay tuned! Next week, I’ll be giving away a free Date Night Club subscription through the end of 2020 to one lucky couple.