I can’t tell you how many times I’ve been thankful that we’ve had an emergency fund. You never know when something expensive will happen, and having a few months of expenses saved up has really alleviated the stress that comes with those unexpected emergencies.The very basic stage of an emergency fund is saving $1,000. Once you’ve reached that goal, you can start to build up your savings over time – but reaching that first $1,000 is key.
I know what you’re saying, “How on earth can I build up $1,000….we don’t even have $50 at the end of each month to spare!” While all of these suggestions won’t work for everyone, there’s a good chance that you can use a couple to boost your savings and reach that $1,000 faster than you think.
Ways To Build Your Emergency Savings
1. Use Your Tax Return
I try to shoot for a $1,000 – $1,500 tax return each year. Yes, I know the money isn’t earning interest, but I’d rather get $1,500 back interest free than make a mistake and pay $1,500!
2. Bi-Weekly Pay Bonus Check
If you’re paid every other week, you’ll receive 28 paychecks each year. That means most months you’ll receive 2 paychecks, but in 4 of the 12 months, you get a 3rd paycheck. Plan ahead for the extra check and put that towards your emergency fund. If you make that a goal each time you get that ‘extra’ check, your emergency savings will build faster than you can imagine!
3. Christmas Bonus
Hopefully you’ve started saving for Christmas already. It’s not too late if you haven’t! Divide your Christmas budget by 5 and try to save that much each month until you need to spend it in November. If you happen to get a Christmas bonus at work, put that money in your emergency fund.
4. Stop Retirement Contributions
I don’t like telling people to not save for retirement, but if you need to stop for a few months to build your emergency fund, I’d recommend that you consider it. Once you’ve reached your goal, start back up as soon as possible. If you’re not saving for retirement…try to start with something small ($15 or $25 a paycheck) and increase it over time.
5. Sell Stuff
We’ve had pretty good luck with making money on eBay. Most of the stuff we’ve sold has been books, but you’d be surprised what people will buy on eBay (like empty iPhone boxes…). Last year, we made over $300 with an eBay garage sale and my friend Peter at Bible Money Matters made over $300 with their yard sale this past weekend – read about his garage sale tips.
6. Get a Side Job
I know you’re busy, but if you’re serious about building an emergency fund and the other suggestions just aren’t working for you, then try to look for more income. Whether you’re mowing lawns, cleaning windows, or working a weekend at a restaurant, you can make a few extra dollars and set yourself up for those emergencies that seem to come out of nowhere!
What would you suggest to someone who is trying to build up an emergency fund this summer?