Are you constantly trying to save for an emergency fund without much success? Or do you feel overwhelmed thinking about starting your emergency fund?
If so, then you’re in the right place. Keep reading to see my top tips for success in finding ways to tuck some money away for a rainy day.
I have made all the mistakes in the book, but along the way, I’ve learned a few things. And now I want to share them with you so you can possibly avoid my mistakes and start saving for your emergency fund.
Tip 1: Break it down into smaller amounts
My first tip is to not worry about the total amount those so-called experts say you “should” have. The fact is that even a small amount of money in the savings account puts just a little bit of space between you and the next emergency.
When was the last time you needed to put groceries on your credit card instead of paying cash because you ran out of money before the end of the month? If you had a few twenties tucked in the bottom of your purse that would allow you to buy some bread, peanut butter, chicken thighs, and other inexpensive options that will get you through to the next payday
Any time you put something on your credit card you’re going backward. And trust me, I don’t speak from a place of judgment but from experience here. I have certainly sat in my car in the Walmart parking lot calling the automated number on my credit card to see exactly how much I had available to buy groceries until the next payday.
But when I can, when things are good, I will take out an extra ten or twenty and tuck it away in my wallet. If I can do that two or three times in between the bad times then I am better prepared for that unexpectedly smaller paycheck (or that random art project you get told about the day before it’s due!).
So, don’t try to tell yourself you’re going to save three months of expenses when you’re barely making it through each month. Just try to get creative and look for ways to make an extra ten dollars somewhere and then tuck it away for a rainy day. Do this enough times and you’ll be surprised at how much you feel better by such a small amount.
Tip 2: Keep it in a separate bank
It doesn’t do you any good to save up extra money if you can quickly transfer it back to checking when you see a good sale somewhere. Sometimes I have found that I just need to protect myself from myself.
And the best way to do that is to open a separate bank account somewhere else. I have a small savings account at a tiny local credit union that only has two ATMs in my city and I only have an ATM card attached to it. So, basically, if I want that money I have to make a separate trip to their branch to get it. And by the time I do something like that, it has to be an emergency to make that kind of an extra trip.
Look around for a small bank or credit union that offers a truly free savings account regardless of how small your balance is. Then open a second account and start making small deposits to build up a small balance.
Like I said earlier, even a hundred dollars gives you peace of mind. And $300-500 truly puts a nice safety blanket over that inevitable Murphy’s Law we’re always trying to avoid.
Tip 3: Sell something
Let me guess when I mentioned in the last section that you try to earn an extra ten dollars, did you scoff a bit? It’s okay if you did, I’m good with it!
But you will be surprised what you can find when you start looking around your house. When was the last time you cleaned out your kids’ closets making sure everything fits? One trip to the consignment store and I can usually find at least $20-30.
And like I mentioned, I just tuck that away for a rainy day. Unless of course, it’s already a rainy day and you’re frantically looking for anything to help out. In that case, get serious. What do you have hiding in the corners of your closet or deep in your garage? Like Dave Ramsey says, sell so much stuff the kids start to worry they’re next! The nice little bonus that comes with it is that you get cleaned out closets afterward!
Tip 4: Meal plan
My fourth tip to save up money for an emergency is to take the time each week to write out a meal plan. I don’t even try to make this a fancy ritual with seven beautiful homemade hot dinners mapped out each week.
But what I do make sure to do is sit down each weekend and look at our schedule for the next week. Do we have an exceptionally busy day? Plan a crockpot meal that night. Do we have anything in the freezer I can dig out and plan a meal around? Jump onto Pinterest and find something interesting to whip up.
If you’re interested, I have a free meal planner printable you can use to help you get started. It walks you through step by step how I plan out our dinners each (or most) week. But to be honest, there are plenty of weeks that I do this entire process on a post-it note, so don’t worry about trying to make this a full ordeal with pretty printables, just get it done.
The beauty of this is that when you reach that busy evening you won’t be tempted to order Chinese takeout and will save your money instead.
Tip 5: Pay down debt
It might feel weird to say to pay down debt when you’re trying to save money. But the truth is that there isn’t any point in having too much in a savings account earning 0.2% interest when you also have thousands of dollars of debt on a credit card at 10-20% interest.
Go back to the first tip and pick a smaller amount. I chose $500 because it seemed attainable and wouldn’t take forever. Then, once I had that small cushion I started using the extra money I was finding to build savings and started putting it towards the credit cards.
The beauty in this final tip is that as you begin to pay off the debt you’ll have more wiggle room in your budget. Don’t get crazy and spend it elsewhere. Go back to the drawing board, and step one, and figure out a new amount you want in your emergency fund. At this point, you could simply choose to build it up to $1,000. This will give you an even better cushion and protection from the proverbial Murphy’s Law.
As you move along this journey of spending less and saving more you’ll find that your emergency fund progressively gets bigger and bigger. But for now, start small, focus on saving money with meal planning, and then look for something you can sell to build up your funds faster.
Budget for success: Save for emergency fund
Like it or not emergencies will happen. Some will be catastrophic and others will be minor inconveniences. However, when you don’t have anything tucked away for a rainy day even a minor setback can feel like a monumental mountain.
Now, when you follow these simple tips you can rest assured knowing that you have a little bit of extra cash saved for your emergency fund. If you’re having trouble keeping up with your budget, you can check out my article showing you how to create a budget for those of us who hate to budget.