Building an Emergency Fund should be on the top of your agenda for the new year. If you have lived long enough, then chances are you have run into an unexpected emergency. You check your bank account and it’s emptier than an abandoned building in a ghost town. Who can you call? GhostBusters? Do you max out your credit cards or call your rich uncle Sam? Dang, you don’t have a rich Uncle Sam. Many women will require emergency cash assistance at some point or time.
Panic begins to creep in because you are at a total loss of what to do next?
You start the path to create an emergency fund. Let’s go over the basic ins and outs of emergency funds.
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What’s An Emergency Fund?
Investopedia defines an Emergency Fund as the following: An emergency fund is a readily available source of assets to help one navigate financial dilemmas such as the loss of a job, a debilitating illness, or a major repair to your home or car. The purpose of the fund is to improve financial security by creating a safety net of cash or other highly liquid assets that can be used to meet emergency expenses, as well as reduce the need to draw from high-interest debt options, such as credit cards or unsecured loans—or undermine your future security by tapping retirement funds.
An emergency fund is a stash of money set aside to cover the financial surprises life throws your way. Trust me these surprises will come your way… it’s not if, but when they do. All of this can be stressful, but they can be avoided. Here are some of the top emergencies people face:
- Job Loss
- A medical or dental emergency
- Home Repairs (HVAC replacement, plumbing leak)
- Car Repairs
I have different stashes for different emergency funds ie., I have a home repair and a car repair emergency fund... I also have an emergency cash fund for emergencies that may require you to have cash on hand…
The list can be extensive. However please note, a trip to Cancun is not an emergency. Beyonce Tickets are not an emergency. I’m sure you get the picture.
Why Save For An Emergency Fund
Are you confused as to how much should be in your emergency fund? It’s ok, you have come to the right spot. Let’s get started with the basics. Follow these steps identified below to help you set goals and take steps toward starting an emergency fund.
40% of Americans do not have $400 in their accounts and the numbers dip even lower for folks with melanin in their skin. #dontgetcaughtslipping.
Imagine what life would be like if that same emergency happened and you smiled. Not because you are happy, but because you are amused at the notion that the devil tried you. Not today Satan should be your response. You need to remind him, that you are a badass and you have an emergency contingency plan in place that incorporates an emergency fund.
Nothing better than getting on the road to financial success by taking actions that make you financially prepared for the unexpected.
Ellevest has an awesome article on What You Need to Know About Emergency Funds. Take a few minutes and sign up for your free account and get your emergency fund started asap.
Why Have An Emergency Fund?
Simply put, it makes better sense to be proactive than to be reactive. An emergency fund provides you with peace of mind. If you are like many Americans then you may be living paycheck to paycheck. If you are working on the Goddess Affect – that will soon be a thing of the past. Having an emergency fund will keep you from dealing with the stress of not having one. Trust & believe that you can not pinpoint when an emergency will occur, but it will occur and you want to be prepared.
How Much Should You Save
At a bare minimum, I advise people to try and save $1,000 initially. You will feel a great sense of accomplishment when you have saved your first $1000. The recommended strategy is to save 3-6 months worth of your living expenses.
Let’s Start Building
If summer bodies are made in the winter, then emergency goals are made at Ellevest. Goal setting is the door and getting started is the key. It honestly takes you less than 10 minutes to set up your free account at Ellevest.
Establishing a written goal is intentional and precise. There is something about seeing it written down or in this case on a computer screen when you log into your Ellevest acct Every little increase in savings will feel like a monumental accomplishment especially if you have never had an emergency fund or established a goal and started taking action.
Be Specific, include the following
- The amount you want to save
- The date you want to reach the goal
- How you will reach the goal
- Why you set the goal in the first place
How Much Do You Want Save
If you want to save $1000 over the next six months, you will need to save $166.66 per month to achieve this goal. I get it that you think you are strapped for cash and don’t have any extra money. The reality is that you can’t afford to not save. You need to do what you should do to have a better financial future. Goddesses boss up and handle business, no excuses.
Focus on the small steps that you can accomplish. Consider saving weekly – $42.00 (rounded). Do not allow negative thoughts of what you can’t accomplish to intrude upon your thoughts.
Automate Your Savings
Automation is key in helping you to achieve your goals. Don’t over complicate the process. You can, in fact, do an automated transfer to your Ellevest Acct. You are 7 times more likely to reach your Emergency Fund Goal when you put it on auto-pilot.
Choose a specific acct to transfer your into. Even if it’s not your Ellevest acct, still get started. Transfer your funds on the same day and time. Get into the habit of doing this.
You can also automate this process, which is the preferred method.
Create A Budget And Stop Waisting Money
A budget will help you to identify all the non-essential stuff, junk, misc, target, Walmart, TJX and Marshalls stuff that you are purchasing that you don’t need.
I get it, you think you have to have Starbucks daily, but $5.80 adds up quickly. If all you do is spend, and spend, how will you save? Spending is a temporary high, but saving is the ultimate high. Trust me when I tell you that it’s a great feeling to see your savings increase.
Reduce Your Spending
Review your goals on a weekly basis if not daily. Celebrate the small things. Identify your weaknesses. A quick review of your bank statement will highlight what you are spending your money on. Go ahead and find a pink highlighter and make a quick list. Do you really need a venti mocha more than an emergency fund?
Join A Facebook Group
Find a support group of like-minded people. I suggest the Dream Catchers : Live Richer w/ The Budgetnist group. You will want to surround yourself with like-minded people that are looking to support and encourage you as you reach your goals.
Show Me The Money
Show me the money honey. At the end of the day, the easiest way to increase your savings is to increase your income. I’m not saying run out and pick up 5 jobs. I am saying to take a look at different things that can earn you money on the side. Increase your hustle, Goddess. Start a T-shirt business like mine LIFE1619, a Shopify site that uses drop shipping such as the Black No Sugar No Cream Based on the example goal above, we only need to earn an extra $166.66 a month. There are too many ways to earn money and never leave home.
Sign up for yourEllevest account. Visit the link for more details.
Ellevest was built by women, for women. The financial industry wasn’t. Become a member and do more for your money and career.
Boss up and handle your business and get your acct created and fund your first goal.
Simple Tips To Build a $1000 Emergency Fund
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