Life happens—but how do you financially prepare for life’s inconvenient and unavoidable surprises? Creating a financial cushion not only protects your finances during a time of crises but also helps to give you the mental preparedness needed in order to deal with an extraordinary situation. A healthy emergency fund should cover anywhere from 3 to 6 months of income in the case that you are unable to work or a large expense incurs.
Understanding the importance and appropriate size of a financial cushion is one thing but creating a true emergency fund is another – there are some basic ways to jump start your emergency fund that can be adopted without completely uprooting your current lifestyle.
Give yourself a Turbo-Boost
Most people find that it is easier to build on something that already exists – be aggressive at the beginning in order to get a good base in your emergency fund. $1,000 is a solid starting place for this savings account on which you can then build upon slowly; this amount would take care of an emergency like a car repair.
Dragons are said to hoard treasures and build them up into a stockpile of riches over a long period of time. You can adopt this method by collecting your coin change at the end of each day and adding it to your own “stockpile of treasure.” Speed up this method of saving by including $1 bills (or even $5 if you’re inspired) in your end of day treasure. For your paper bills, use an envelope as storage and deposit it into your emergency savings fun at the end of each week.
Clean it up and Cash it in
Sell all of that extra stuff you have built up over the years. It’s easier than ever to hold a garage sale through an online site like eBay! Go through your home room by room while making a list and taking pictures of everything you are willing to sell. Upload the items onto eBay and sell it all. Don’t count anything out – you are sure to be surprised on what people are looking for and remember “one man’s trash is another man’s potpourri!”
Hint: your closet is usually the jack pot! Hit the resale clothing boutiques for a more convenient way to pick up some cash; you might not earn as much but it’s a quicker way to sell some of that extra clothing that you never wear.
Pick up a Hobby
Did I say hobby? I meant part-time job. You can turn a hobby into a money maker by picking up a part-time job entailing your favorite activity. For example, if you love to swim you can teach swimming lessons. Or maybe you love to exercise– start teaching exercise classes at your gym. The possibilities are endless as you can turn any craft, skill or passion into some extra cash by utilizing what you love to do most! Take any income that you get from this and have it directly deposited into your emergency fund.
Things to Keep in Mind
Saving money isn’t easy; if it were, everyone would have extra savings stored away. Set goals for yourself and do your best to attain them. Staying disciplined while integrating a few money saving strategies into your everyday lifestyle will help you grow your emergency fund faster than you ever expected. The small changes that need to be made in order to create an emergency savings account is well worth the peace of mind that you will have in knowing that you will be protected financially if anything unexpected were to occur.