Part 1

Being financially prepared is probably the best position to be in when tough times strike. Emergency funds help us stay prepared for a financial curve ball. Things like unexpected illnesses, unplanned home repairs to car troubles and even a job loss. No matter the scenario, having a little extra cash tucked away will serve you well and lower your stress levels in a time like this. Lets go over the best way to start or build your emergency fund quickly and effectively.

Mindset

Some people may have a negative view of saving money or a hard time seeing the benefits. That being said, mindset is very important in order to do this successfully. You need to be willing to do what it takes NOW in order to have an easier financial picture later should an emergency come up. I would encourage you to think of an emergency fund as a personal insurance policy. You pay into it over a period of time when you do not need it. In the event that you do, you will have it and it will make your life easier.

Setting Your Goals

Successful saving comes by understanding where your goal is. Do you want to save $1,000 just in case? How about having $3,000 in your account for an emergency? Whatever the number, write it down and set it as a goal. Goals are there to give us something to look forward to while also having a clear target. The numbers above are great numbers to strive for. Getting there may take some time for some people. You know what, that’s okay! The most important thing here is you have a goal and you are working toward getting there to checking it off. Success comes with consistency. Not the dollar amount. Do not be afraid to grow slowly, rather be afraid to stand still.

The Math

Once our mindset is right and the goals are set, we now can use math to help us break down our seemingly large number. $3,000 is a large number to a lot of folks. Lets break down that large number based on when we would like to achieve that goal. Lets say 6 months.

  • That’s $500 per month
  • $124 per week
  • Roughly $17.85 per day

That big scary number now looks pretty small. Hey, if you can contribute more go ahead! This is just an example on breaking down our goals to smaller, achievable numbers. How much of this do you spend eating out or getting Starbucks?

Short Term Sacrifice

Everything good in life is worth waiting for right? Sadly, we all want things right now in the US and increasingly other parts of the world too. This has contributed to the massive success of convenient fast food companies like McDonalds, Wendy’s, and others. How about we take some of that back to help put us in a better financial position. For the length of this emergency fund goal, try limiting your takeout, fast food, and coffee intake. Instead, put that money toward your emergency fund… your insurance policy for rainy days. Going through your expenses may shed some light on other expenses that can be cut and added to your fund as well! Focus on changing some things now so your future self can thank you for it later.

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