Creating an emergency fund isn’t difficult so learning how to start shouldn’t be either. Here are 4 amazing strategies and tips to building your nest egg for a rainy day.
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When an emergency occurs, you’ll be ready
We can’t predict the future, but we can sure prepare ourselves for it when a rainy day disrupts our parade. Having an emergency fund allows us to have a peace of mind and also creates financial confidence. As Grant Cardone says, assume control of all situations; so prepare now so you’ll be ready later.
#1. Create an Emergency Fund Goal
When you don’t know where to begin, start by creating an emergency fund goal first. Everyone’s goal will vary due to income and the amount of debt carried. A good minimum would be $1,000 – $2,000. An ideal and longer term amount would be $10,000+.
Did you know that more than 50% of Americans can’t afford an emergency bill of $500? There is something seriously wrong with this.
DO NOT be part of this statistic, create your emergency fund goal right now. Literally right now. Just set it, and work towards manifesting it. YOU CAN DO IT.
Before you begin to build your hefty nest, make sure you’re debt free first. Contributions will be so much easier this way. If you’re not debt free, set the goal for your small emergency fund and work on eliminating debt before you start paying yourself first.
#2. Pay Yourself First
When payday comes, be sure to pay yourself first (SAVE). We often tend to splurge and sometimes put away what’s left. You know exactly what I’m talking about.
Paying yourself first is the complete opposite; spend after you’ve put money away towards savings. Check your calendar and see what must go towards your expenses. Deduct it from your earnings and focus on saving the portion that will help you reach your goal.
Find which week works best for you out of the month to save. Once your expenses have been taken care of, pay yourself first, and enjoy what’s left. If most of your income covers your expenses be sure to check out my post on the7 easy ways millennials can start earning more money to see how you can earn extra income.
Now that you have your target, you understand how much you must put into savings every month to meet your emergency fund goal. Do what you have to do in order to make this happen.
Make sure any additional cash is directed towards your money goals.
#3. Don’t Let Your Savings Collect Dust
This is where you take the first steps towards allowing your money to work for you. Put it in a high interest savings account.
Keep about a quarter of your savings in your personal savings account as liquid asset (money you can take out immediately). The more you put into your high interest savings account, the quicker you will reach your emergency fund goal through the amazing work of compound interest.
In other words, discipline yourself to save for your emergency fund.
Saving money might seem like a sacrifice at first but by being consistent you’re now creating a great habit and financially stable life. Your future self will thank you.
Remember the importance of having an emergency fund. The benefits of being prepared include:
Having money in case of car issues
To cover emergency hospital bills
Security in case of a layoff
Financial peace for your family
The best way to carry out your mission on building your emergency fund is to put money away every month no matter how good or bad it was.
Develop this winner habit and you’ll be meeting your goals in no time.
Keep yourself motivated
If you find yourself losing motivation remember why you started in the first place. Nothing good ever comes easy.
Look for motivational and inspirational accounts on Twitter or Instagram. I personally post motivational content from time to time on IG.
Don’t stop at nothing.
Here are some life changing accommodations to help you save money
These Tips Require Discipline & Action | Start Saving For Your Future Today
1 – Don’t get into further debt. Wait on that awesome new car model that just came out. Perhaps work in your field a little longer before furthering your education. Remember, the more debt you have the harder it is to save.
2 – Start a side hustle. Use that additional income to add to your emergency fund and reach your target quicker. Don’t stop increasing your income.
3 – Live below your mean. This strategy will allow you to build your net worth so that you don’t live paycheck to paycheck.
Let me know in the comments below
Have you reached your emergency fund goal?
The readers would love to hear from you. Share your thoughts below.
Financial education or financial literacy, is the education and understanding of multiple financial areas and topics related to managing personal finances, money, and investments.
So why are millennials so quick to avoid the topic of financial education, and why is it essential we empower ourselves with this knowledge no one is teaching us today?
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The Discipline of Saving Money
Why save now when you can save later! I’ll do it when I make more money. Let me take care of Christmas first. The list goes on when it comes to reasons as to why we cannot save money.
The discipline of saving money at an early age in life will become the most rewarding thing you can give yourself in a time much different from where you are today. So why is it so difficult to save money? I mean we’re able to purchase the latest gadgets, splurge on streaming services, and constantly eat out after all.
Financial literacy teaches us that money is nothing more but a mere tool that opens possibilities and allows us to walk through life without the financial stress most of us can’t seem to stay clear of. I grew restless of living paycheck to paycheck. It was annoying, tiring, and overall an unnecessary stress that needed to be eliminated in order for me to focus on the things that truly mattered the most.
All it took was a shift in mindset and educating myself financially. And of course, the discipline to save money.
We tend to give the dollar a little too much value; we keep it close. One thing we must learn to do is to let go of the money, but not in the manner of spending it. It must be pooled into an account where you will consistently be depositing in order to ensure you begin building a safety net.
This will be useful in case of a sudden emergency (which will occur at some point), a shift in job/career, or for a large purchase such as property.
Investing Is Easier Than You Think
Learn the power of compound interest
A simple way to invest your hard earned money is by allowing your earnings to start working for you. Investing does not necessarily mean you have to invest in the stock market or real estate. One of the most simple ways to start your very first investment is by opening a high yielding savings account or money market account.
If you have a savings account it’s very likely your current bank is paying you 0.01% in interest a year. That’s a penny a year! They’re already investing your money so why not move your earnings to a high yielding savings account.
These bank accounts can pay up to 2.05% in interest per year. The amazing thing about these accounts is that the longer you continue to save, the more compound interest starts to reward you.
Compound interest is when interest is earned on the initial deposit, every deposit made, and on top of the interest already earned! Guys, I don’t think I’m the only one that wishes they’d known this sooner.
Rates will fluctuate from time to time but it beats leaving your money sitting in an account only to collect dust.
Now that you’re consistently saving money, budgeting, and have made your very first investment, you’ve taken the initial steps towards reaching financial freedom.
Financial freedom requires self discipline, and a true desire for a financial stress-free life. By financially educating ourselves, we are able to navigate through our lives with one less thing to worry about so we can pursue and focus on the things we most value.
Take control of your life, teach this to everyone you want to see win, lets secure an amazing future, and be known as a financially educated generation.
Have you set a goal to become recession proof? We share 10 successful ways to save money during a recession to help you reach financial stability.
10 Successful Ways To Save Money During A Recession
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Recessions teach us a lot. They teach us a lot about ourselves and about our finances. You can only really end up on two sides of the spectrum. That is, wow my family and I were really prepared or wow, we need to change some things.
Whether an economic downturn affects or doesn’t affect your finances, these 10 tips on saving money during a recession are going to benefit you.
Let’s get started.
#1. Limit Dining Out
Limiting dining out can be a great way to save money during a recession. Platforms such as door dash can cost you additional fees and unnecessary upcharges.
In the old days (pre-recession), dining out was a treat. But things are a little different now. We must learn to adapt ever so graciously.
Today, we indulge in instant gratification. Set a budget on dining out and limit the amount of times you do.
I understand it’s going to be a little rough getting out of your comfort zone but believe me it’s totally worth it! And remember, it’s only temporary.
#2. Under Indulge In Entertainment
Cutting back on entertainment is a sure way to pocket money during an economic downturn.
The times of purchasing new games online, buying new music, or going out to the bars for booze and live music should be put on a temporary hold.
When it comes to money savings goals during a recession, you’ll have to prioritize your needs over your wants.
Substitute the cinema for move nights at home or find other alternatives to have fun such as playing sports at your local park or visiting a library.
Not only is budgeting your entertainment a successful way to save money during a recession but it can also be a great way to spend more time with the family doing fun and healthy activities.
#3. Save At The Pump
Save fuel by adjusting your driving habits. By increasing your mpg, you can save money at the pump by stretching your days before having to refuel.
Driving safer and without constantly stepping on the pedal will allow you to get more for your buck. Change your driving habits and start saving at the pump.
Shop around at the pump
You can also shop around when needing to pump fuel. This strategy is an effective way to stretch your buck and save money during a recession.
Look at the gas prices in your area and go with what’s most convenient for you.
Prices are usually lower on Monday mornings.
#4. Meal Prep
Meal prepping is an amazing way to save money during a recession due the convenience of using household foods for lunch more than once.
Some benefits to meal prepping are:
Healthier options than eating out
Least expensive alternative
Prepping can last a few days
It’s a great winner habit to develop
It won’t take long before you begin to see the saving potential meal prepping has on your finances.
#5. Become Aware Of Utility Usage
It is important to keep track of your expenses, especially utilities such as electricity and water. Become aware of your usage to see where you can cut back on costs.
Cutting back on unnecessary use of electricity or water is a successful way to save money during a recession. You can cut the bills in half by:
Turning off lights in empty rooms
Using efficient and eco friendly bulbs
Limiting the A/C timer
Taking shorter showers
Using less water
If you can find miniscule ways to cut back on utility usage then you will be successful in saving money.
#6. Monitor Your Daily Habits
Admittedly, a lot of us don’t monitor our daily habits. A lot of the things we do on a daily basis costs money. A great example for instance could be the purchase of a coffee every morning.
You can save money by monitoring your daily habits and seeing where you can cut back to make a difference. If you’re spending $6-$8 five days a week on coffee or a drink that’s $30-$40 you can be stashing away. That’s $312-$416 a year that could be used for personal savings.
The truth is the money that we spend on unnecessary things is overwhelming. It’s no wonder more than half of Americans cannot cover the cost of an emergency expense over $500.
Start setting your goals down and begin to eliminate the things holding you back from becoming financially stable.
#7. Practice Self Grooming
Whether you’re trimming your own beard, cutting or styling your own hair, or doing your nails (ladies), practicing self grooming is an awesome way to stay on budget.
Practice self grooming to save money during a recession so you can stay looking fresh while saving an extra couple bucks every month or so.
It’s more cost efficient to invest in your own machine and pair of scissors to cut and style your own hair. The same goes for women’s nails. You can invest and a great set of nails oppose to getting them done at the salon. You can always look great even on budget.
#8. Shop Around
Don’t get #8 confused with shopping at malls or outlets. See which grocery stores have the best prices and deals so you get more than what you pay for.
If you’re used to always going to same grocery store you could be missing out on some amazing deals. Don’t miss on money saving opportunities due to comfort. Shop around and see what items are best to purchase from specific stores even if it means getting something things here and there.
#9. Delay Gratification
Save money during a recession by delaying gratification.
The clothing stores with 50% off discounts can wait, those won’t be going away any time soon. During a recession, it is important that you stack your money in case of an emergency.
It’s during these times of economic hardships that you see dealerships drop their APR to 0%. Yes a 0% APR is tempting but don’t fall for it. Whatever you do, do not get into further debt.
#10. Increase Your Income
And of course one of the most effective ways to save money during a recession is to increase your income.
When you increase your income you can continue to live within your means while saving the additional earnings.
You may increase your income through:
The use of a high yielding savings account
Discretionary income such as a spouse working
Side hustle
Raise or promotion
Over-time at your job
Head over to our ‘Side Hustles‘ tab to see some of the many ways you can begin to earn additional income.
Be sure to browse through our posts to find a number of ways from which you can earn money through side hustles and even make money from home!
Let us know in the comments section below if you have other great tips on how to successfully save money during a recession. Our readers would love to hear from you!
