Why an Emergency Fund?
The first step in turning your finances around is to save $1K to start your emergency fund. If you don’t have at least $1,000 saved then you need to focus on doing it now and come up with a plan to get the money saved as soon as possible.
In the 3 Month Money Pivot course, one of the first month activities is to establish your emergency fund. This post is intended as a resource to help you figure out how you could save $1k in 1 month.
An emergency fund is intended to give you some padding or breathing room so that you can focus on getting your money in order. It’s there for peace of mind and serves as your first ‘win’ in your journey to turn your money situation around.
You must treat the emergency fund as sacred and only touch it in a true emergency. If you have to get into your emergency fund then you must refund your fund as quickly as possible. Read this article for some ideas around when you should break into your emergency fund.
This money is there to protect your future self and family. So don’t cheat! Your future self will be mad at you. This is a step in the right direction for a financially sound legacy.
How can I reach my $1K Emergency Fund goal?
So, how are you going to save $1,000 in 1 month? I know that you can do it. You have the resources and skills. You’re reading this so you’re looking for solutions.
Here’s a list of suggestions that just might work for you. Remember that every little bit counts. Some of these you’ll put in place now but they’ll be good for the long-term to help you build your fund to 3 to 6 months of expenses and get you in great position moving forward.
- Cut Expenses
- Cell Phone - You can probably cut this expense by at least $50 per month. Check with your carrier for options to lower your bill. Shop around for other carriers for competitive plans.
- Insurance - Consult an independent insurance agent. Dave Ramsey can help with this. https://www.daveramsey.com/elp/insurance?ictid=64AS81379
- Stop eating out! - Pack your lunch whenever possible.
- Groceries - Plan your meals to avoid rogue (impulse) spending at the store. Food is a major expense for my family so we're constantly looking for ways to save in this area.
- Television - Cut the cable or ditch the dish. Reading is better for you. Television not only costs you in terms of the monthly bill but also with your time. Most likely the advertising is causing you to spend even more on other stuff!
- Recurring Payments - Check your statements (bank, credit card, PayPal, etc.) for any automated payments for services that you can cut. You may have signed up for something a while back that seemed important at the time but you can get rid of now.
- Sell Some Stuff on eBay or Craigslist. Most of us have things that we can let go of. Now is the time to do it!
- Make More Money - This one could be a biggie in getting to your $1k in 1 month. What skills do you have to bring in more money? What is your availability?
- Freelancing - Sites like Fiverr are easy to get started on. If you have a skill such as graphic design, software or web development, writing, or editing then this would be a viable way to get your $1k stashed fast.
- Uber Driver - Do you have a reliable vehicle and would you be willing to drive some folks around in your 'off' time. It's fairly quick and easy to get this going and would be a great asset to your income arsenal.
- Work a weekend or evening job. Work in the margins until you've got your $1k fund. Deliver pizzas, wait tables, clean houses, or babysit. Businesses and people always need help. You just have to get out there and look.
- Overtime at your job. If your company offers overtime then they may let you work some extra hours.
- Cash Out
- Whole life policy - Cash out your whole life policy and go with a term policy.
- Stocks - Do you have an old trading account? Check and see if you can sell out for your emergency fund.
- Tax Refund - Some say that you should aim to keep more of your taxes throughout the year and I agree especially if you can be responsible with it. But if you're planning to get some money back from old Uncle Sam then the refund should go to your emergency fund since you don't have one. However, if tax refund season isn't eminent (this month) then you've got to get your $1k some other way..
- Temporarily Decrease or Stop 401(k) Contributions - If you're doing automatic deductions into your 401(k) then you could stop or decrease it until you get your emergency fund in place. If your employer does matching then at least do the match though until you can ramp it back up. You don't want to leave money on the table. If you have debt such as carrying a balance on high interest credit cards then you need to do the same for that. Pay it off before increasing your 401(k) contributions. If you do this then make sure that you get your contributions back in place once your fund is established and your consumer debt is gone.
- Automate Your Savings - Put it away before you see it. Determine how much you can automate in your paycheck and see if your employer can send to your emergency fund account automatically.
- Share your goal to get your $1K emergency fund. Letting others know about your goal will spark conversation and ideas to help you along. Your network of friends, co-workers, church, and family will support you. This will also give you a sense of accountability to those you've told.
To get to your 1K the fastest, you’ll need to do the things that allow you to save the most in the short term such as cutting expenses, selling some things, and making more money.
Here’s a sample allocation of how you might tackle getting the $1K for your emergency fund.
Cut Expenses - $200
Sell Some Stuff - $500
Make More Money - $300
All of these suggestions add up, so if you put some of the longer plays in place then you’ll get some of it and then you’ll need to get creative with getting the remainder. Think of how much better off you’ll be if you go ahead and implement the longer term changes while you’re motivated and already in ’emergency mode’. The goal here is to get the $1K emergency fund in 1 month so get fired up and get started!
Download the Emergency Fund worksheet!
This one page worksheet will help you to get to your $1K Emergency Fund fast!
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