We never want to discuss our money unless we are complaining about a lack of it or sharing about a big ticket purchase like a home or a new car. However, when it comes down to getting into the cracks so to speak, we want nothing to do with that topic. Money is the main reason for divorce. If you are lacking, it can be a source of true stress so its no wonder people are willing to earn and burn right through it. No one wants to really sit down & review what is truly in their accounts.
This past week I have been doing a series called The Steps To Financial Security, and we tackled the hard parts that people really don't want to talk about. While there was a lot of information shared there, one of the foundational pieces of getting to financial security is making sure you are prepared for life's Murphy Law moments. One of the people in the class shared "every time I save a few dollars, something happens that makes me have to use it" to which my response was, aren't you glad you had that savings then? Can you imagine having $1k in savings and having an emergency situation come about that costs you $1,200? That $200 is a lot easier to come by than the full $1200, wouldn't you agree?
The goal is to accumulate 3 to 6 months worth of your monthly expenses but baby steps, remember, we must crawl before we can walk. So many of us do not have a plan in place for emergencies. I personally found cracks in my plan when I needed it most and let me tell you, that is not when you want to find the cracks. Getting ready ahead of time is a wise way to handle the decision to get right in your mindset about your plan for financial freedom and your approach to spending and saving.
A budget will help you figure out what you spend each month and on what, after you figure out your budget, that's when you can find dollars to start allocating for your emergency fund. I know this can be a little overwhelming for some so if you need help, reach out, I certainly don't want you to be caught off guard the way I was and my team and I are willing to help.
Most Americans are only a mere 2 weeks away from being homeless if they were to lose a job. Many of us would have to rely on family or move back home with our parents if we were out of work for a month or more so that emergency fund will keep you out of your moms basement for at least 6 months if you truly commit to saving consistently.
Need extra dollars to put into your emergency account? Here are a few suggestions to bolster your bottom line.
- Sell off some items you no longer have any use for. Anyone who knows me, knows I am a reformed shoe addict, when I decided to move out of the country, I sold off all of my shoes. That resulted in almost $2k for my emergency fund. What do you have that is trash for you but a treasure for someone else? Sell it and stash that cash in your emergency fund.
- Make going out to eat a special treat. Many of us eat out a lot more than we eat at home. When my kids became adults, I thought, I will never cook at home again because I don't have to. That was foolish & I soon tossed that out the window because eating out is costly. For what you pay for one meal out, you could have shopped for a couple of days worth of food. So instead, save those dollars and make the money you save from not eating out pay for your future emergencies.
- Take a special skill you have to earn additional income. Do you know something that you could teach others and you derive pleasure from it as well. If you play a musical instrument, are a wiz at calculus, these are skills you can put to use in building your emergency fund.
- Contact your creditors and ask for a reduction of your interest rate to lower your payments. While they are reluctant to allow this, many creditors would rather give you a break than to have to send you to collections with no possibility of recovering the monies you owe. Getting a reduction or asking for a principal only payment even if its only for a fixed amount of time will help you save on your monthly expenses and allow you to add to your savings.
- Stop spending full retail on things you can get at a discount. I mentioned being a shoe addict, in addition to that, I had a ton of clothes. Many of them were high end designer but they were all purchased as consignment shops. If you need new clothes, there is no rule that sys that they have to be brand new, they can be new to you. Purchasing from thrift & consignment stores can allow you to continue to be your fashionable self without the big price tag. Put those clothing dollars on your future.
I hope this information has helped to get your thoughts in order where your emergency fund is concerned. Did I miss anything, what would you add to this list?
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