The importance of an emergency fund is pretty widely understood. A well-stocked emergency fund can help you get out of debt and build wealth. It can help you avoid using a credit card when emergencies arise. It is what separates those strangled by debt and those who are truly living life.
But building your emergency fund can be very difficult to do when money is already tight. So many of us already live paycheck to paycheck and make ends meet with the help of a credit card. When you decide to stop using those credit cards, paying for everything can be so much more difficult.
Here are a few strategies that I have used in the past to grow my emergency fund and will be doing again this March after depleting it earlier this year.
Create a Savings Plan
Challenge yourself to save $1 on the first of the month, and each day save $1 more. This way you are saving money equivalent to the date ($1 on the first, $2 on the second, $15 on the 15th). By the end of the month, you will have saved $500.
This can be easy to do if you cut costs, save money on things you buy, and increase your income.
- Eliminate cable, internet and any subscriptions you have. These can be added in later once you have control of your finances.
- Break a bad habit; eliminate that daily cup of coffee, cut back on smoking, skip the fast food.
- Cancel your memberships to the gym or YMCA.
- Drop the home phone and strictly use your cell phone.
Any money you cut from your budget should go directly into your emergency fund each month until it is fully funded.
- Use coupons. All the money you save by using coupons should be added to your emergency fund.
- Order online and only when you can get a promo code or free shipping. Add that money that you’ve saved to your emergency fund.
- Do less. If you regularly head out on the weekends for drinks with friends, cut that out for a month. Invite your friends over for an old fashioned game night (BYODrinks).
- Pass on extras that pop up throughout the day. Pay attention each time money leaves your account and question every single dime you spend.
Make More Money
This is the area that I have really tried to focus on with my own endeavors. I have tried to find little ways that I can earn extra money in my free time. I’m a fairly busy person but I still do every thing I can to maximize my down time to build wealth.
- Work a second job. Find a second job that works for your schedule. I worked as a product demonstrator for a number of years. It wasn’t glamorous but the money really helped when times were tough. Consider a paper route, delivering phone books or weekend circulars, anything you can do while you are not working.
- Turn your hobby into an income stream. Do you enjoy knitting? Consider selling what you create on Etsy. If you like to write and journal, turn that hobby into a blog. If you like scrapbooking, you could sell custom layout kits on Ebay. Get creative with what you can do and turn that fun into a larger emergency fund.
- Complete surveys online. In the evenings when you are watching TV, complete online surveys at the same time. These can be cashed in for money in your Paypal account or Amazon gift cards. You can find reputable companies (and many other ideas for earning more money) on The Penny Hoarder. I love this site and I’m sure you will too.
Whether you are starting your journey into debt freedom or replenishing your emergency fund after unexpected expenses, use the month of March to focus on increasing your money in the bank. With some hard work, you’ll have saved $500 or more in no time.