How many times has this kept you up at night? You need to start somewhere. Read this how to save an emergency fund article and start to feel better about it. Having an emergency fund can help you in many ways. To have a strong personal financial plan, you will want to include an emergency fund in the plan.
An emergency fund will take a lot of worry and strain off your life. This can help you focus on building real wealth and that will help money flow a whole lot easier.
Learning how to save an emergency fund will get your mind going it the correct direction and will help squash fear.
What is an Emergency Fund
An emergency fund is money you have set aside in case of emergency. A financial emergency can entail a lot of different things. Things happen in life and live is not fair. People loose there jobs and just recently there have been quite a few.
Life might throw something at you like emergency surgery, or you get sick and can’t earn money temporarily.
Your chocolate lab swallows a sock and the vet won’t do anything without money upfront. This actually happened to some friends of mine. Seven thousand dollars later, the dog was fine with a shaved belly and the cone of shame.
Your truck breaks down and you need it to do your work.
There are many other life emergencies I’m sure you can think of. The problem is, we don’t want to think of these things because they are bad. That’s part of what makes saving an emergency fund not very attractive.
Why You Should Have as Emergency Fund
Most people don’t think they could lose their job. Also, they never think about anything that could keep them from doing their job.
Since, these are things we don’t want to think about, we should have an emergency fund to take that worry away. If you aren’t worried of the thought of not making money, it can help you make more money. I know that doesn’t make sense but, hear me out.
When we are constantly worried about making money we are focused on the lack of money instead of the abundance of money. When the abundance of money is the focus, then more of it comes into our lives. Make any sense now?
So, other than the obvious reasons to have an emergency fund, another reason is so you can create more abundance. That seems to be a great reason to me.
How Much Should You Have in an Emergency Fund
There are many financial experts out there that can tell you exactly how much you should have in an emergency fund. Some say 3 to 6 months of expenses. Some say 4 to 8 months and even some say nothing less than a year of expenses.
Let’s get realistic. Most of us start with zero so it’s hard to even think about saving enough for 4 months expenses could ever happen.
It can happen! You have to start somewhere. If you can start to save just a little every month you will start to feel better about saving.
You can start to gain traction for saving every month and it will just keep going up. The more you save the better. Over time the saving becomes easier and easier. The key is to just start somewhere.
Start with a small amount. This will give you the confidence that you can actually save. Start small and build it over time. Make a realistic goal to put a certain amount in the emergency fund every week or every paycheck.
Just make sure your goal isn’t too aggressive or, you may find that you need to take money out for a non-emergency.
Where Should You Put Your Emergency Fund
One of the best places to put your emergency fund is in a high yield savings account. A high yield savings account will earn a little interest on the money you have in there over time.
You want to have the money in an account that allows you to get to it easily. After all, an emergency might not let you wait to transfer funds from the sell of stocks or bonds.
You really shouldn’t keep the cash under your bed. What if the emergency is a fire? You don’t want your emergency fund to burn up in the actual emergency.
How To Grow Your Emergency Fund
You will want to continuously grow your emergency fund so, how do you do that. First, you will want to pay off bad debt. Credit cards and personal loans. Anything that has a high interest rate attached to it.
You may have to pay these off slowly. You don’t want to use everything you have in the bank to pay them off. Keep a certain amount in your emergency fund for an emergency. Start with as little as $500 to make your feel like you are ahead in case of a small emergency.
To really save you will have to cut your expenses if you haven’t already.
See Also: 10 Tips to Save Money Fast
If your day time job isn’t getting the job done with saving an emergency fund then, it’s time to find ways to make more money.
See Also: Multiple Streams of Internet Income
You can start a side hustle to get things moving faster. Just make sure you aren’t spending a ton of money getting it going. Start something in your spare time. Man people start business in their spare time and end up quitting their day jobs.
For a business your can actually start from the ground up for free, take a look at my recommendation below.
Then you want to protect your assets. Identity theft is running rampant and will continue to get worse. Set yourself up to combat against it.
You know that having an emergency fund is better than not having one. Start small and build it up over time. Your’e not saving an emergency fund expecting an emergency to occur but, life is not fair. There is bound to be an emergency come up at some point.
You are better off being somewhat prepared for it than not at all. Don’t leave yourself open for a complete disaster from a small emergency.
When you have a set back don’t beat yourself up. Just learn any lesson you can from it and move on. Try your best to move in the direction you want to go.
Don’t forget the power of starting a part-time business!