How To Save Emergency Funds Fast | Money Saving Tips

How To Save Emergency Funds Fast | Money Saving Tips

Hey guys, do you have a fully funded emergency fund for yourself set up just in case something goes wrong? Let me know in the comments below if you’re set and good to go.

Now, if you don’t have an emergency fund set up or if you have one but you just don’t feel like you have enough, this blog post is for you.

In this post, I’m going to discuss How To Save Emergency Funds Fast?  7 step-by-step money-saving tips that will help you save the full amount of your emergency fund fast. So let’s go ahead.

How much you need to Save for emergency fund

Now, the first money-saving tip to save your emergency fund, guys, is this: the first thing you’ve got to do is figure out how much you need to save for your emergency fund. You want to save enough to cover at least 3 to 6 months of your needs.

Now, I know some folks say that you need to save 3 to 6 months of your monthly expenses, but I believe that you need to save 3 to 6 months of your actual needs each month.

Now, that amount is going to end up being different for everyone because everybody has a different amount of expenses every month.

But this is why you need a written budget, so you can actually know what your actual expenses are and then be able to figure out from those expenses what are needs and what are wants.

And then, once you figure out which ones are the needs that you have to have every single month, you simply multiply that number by 3 to 6 months.

If you have a super duper reliable income, right, you’re a teacher or you work for the federal government or state government, then you only need to have probably 3 to 4 months of your needs saved up in your emergencies.

Now, if you have a very volatile type of situation in terms of your job, right, your income sort of fluctuates on a month-to-month basis or you have a job that you’re just not sure about how long you’re going to be there, it’s sort of unstable, right, then you may need 6 months of your needs or more.

Look, guys, stuff happens, and so having an emergency fund is going to save you in times of need. Look, you sleep better at night, you have more peace of mind, you have less stress when you have an emergency fund.

The last thing you want to do is be in a tight squeeze and have to go down to the local payday loan place somewhere in town, right? You don’t want that.

So you’ve got to put this emergency fund first. And I get it, guys, for a lot of people creating an emergency fund is challenging, especially one that has plenty of money in it that’s going to cover all of your needs for more than 3 or 4 or 5 months or more. It’s tough, but it’s doable. So number 1 is just simply to figure out how much you need to save total.

Now, to finish out number one, after you figure out how much you need, you need to put a time frame on it. You need to say, “Hey, is it going to be 6 months? Is it going to be 1 year? Is it going to be 2 years?”

Now that’s your goal, how much and how long it’s going to take you to get there. That’s a specific goal. You need to make sure you write that goal down somewhere. Now, let’s go to the second money-saving tip.

How much you need to save each month to reach your saving goal

The second step that’s going to help you save your emergency fund fast, guys, is number 2: you’re going to have to figure out how much you’re going to need to save each month, or every 2 weeks, or every paycheck.

How much are you going to have to pull from that money to put towards your savings and ultimately reach your savings goal? So if in number one, you came up with the figure of $12,000 is what you’re going to need and you said,

“I’m going to need it in 6 months,”

well, guys, that means you’re going to have to save $2,000 a month or $11,000 every two weeks to reach that goal.

Now, in step number 2, you’ve got to break this thing down into figuring out what you need to do or what you need to save to reach that goal that you set for yourself in number 1.

Now, notice, guys, number 1 and 2, we’re trying to get organized, we’re trying to establish a goal, and we’re trying to establish action steps to reach that goal. That’s what number 1 and number 2 are all about, guys. If you get value from this blog post…

Move your Monthly Savings to the top of your budget

The third step you’ll need to do in order to save your emergency fund fast is take the amount that you figured in number 2 that you’re going to have to save every 2 weeks or once a month, take that monthly or weekly amount and put it at the top of your budget.

Put it above all the other stuff, prioritize it so it’s high on your budget, it’s high on your list of things that you have to pay to yourself every single month.

Again, we’re prioritizing this amount so we can make sure that we reach the goal and reach the goal fast. If you don’t prioritize it and put it at the top of your budget every single month, guess what? It probably won’t get done.

See, I don’t want you to save your money as an afterthought, after you do everything else that you want to do.

I want you to save your money first, right up there with rent, right up there with utilities, right up there with your giving, right up there with your food, is the regular amount that you’re putting towards your emergency fund to save it up fast.

Now, that takes me to step number 4.

Figure Out Where You’re Going To Put Your Money

That takes me to step number 4. You have to figure out where you’re going to put your money. Where are you going to actually place your money while you’re saving the money up? And then, once you figure out where you’re going to put it, then you have to go ahead and automate it so it comes out of your checking or savings account every so often and goes directly into your emergency fund.

Now, guys, you’re not looking to grow this money in your emergency fund. You’re not looking to make it make a whole bunch of interest, right? It’s not an investment. It’s just an emergency fund for just in case.

Now, you could always choose a high-yield savings account, and that’s cool, right? High yields are good, and they’re cool to help you grow the money a little bit faster because of the higher interest rates that high-yield savings accounts often pay.

Now, if you plan to open a high-yield savings account, you’ll typically open that online at an online bank because online banks are the ones that can offer these higher interest rates to its customers, right?

Online banks, they don’t have to deal with the brick-and-mortar stores, they don’t have to pay payroll for workers to work in the stores, right? None of that stuff exists.

So what online banks can do is they can offer you a higher return on your savings accounts. They don‘t have the overhead and all those traditional expenses of a brick-and-mortar store. But you want to remember something about a high-yield savings account, that is, the interest rates that they advertise to you, those APY rates, those are variable rates.

They can go up, and they can go down. If we’re in an environment where the Federal Reserve Bank is going to be lowering their interest rates, their federal funds rate, then that’s going to have an effect on the amount of interest you’re going to see in your high-yield savings account.

So just keep in mind those rates are variable, and they can fluctuate. They can go way up, right? 3, 4, 5% interest for you in your savings account, or they can go way down too. Just be ready for that and make sure you understand that if you’re opening up a high-yield savings account to hold your money.

Do your research, read the fine print whenever you’re thinking about a high-yield savings account. High-yield savings accounts are great, but there are pros and cons to them. Now, you don’t have to park your money in a high-yield savings account.

You can also consider a basic savings account. You can also consider a money market account. You just need the money to be safe, FDIC insured, and you need to make sure that you have easy access to the money, and you can get to it quickly.

You have other investments that are in growth investments, such as the stock market, where you’re going to be gaining interest on your money.

Now, I’m not saying that interest is not important, but I’m saying on this emergency fund, you’re not parking it somewhere strictly to make money on it.

You’re parking it somewhere to make sure that it’s there and available to you, and you can get to it immediately, whether that’s down the street at a savings account in your regular bank, or if it’s online.

You have to do what you feel is best with that money while you build it up. So number 4  is figure out where you’re going to put the money, and again, remember, make sure you set up automatic withdrawals and automatic deposits into that account from wherever that money is coming from.

Now, before I go further, let me emphasize something, guys. This money is for emergencies only, not for reoccurring expenses that occur every single month or every single year.

Christmas is not an emergency. It happens the same day every single year. Homeowner association fees, gas for your car, those are not emergencies, guys. Those are things that you should be budgeting for on a regular monthly basis, and they should be in your budget already.

Emergencies are unexpected things, right? The unusual stuff that happens that’s out of the ordinary that you couldn’t have budgeted for. I just want to say that because sometimes we blur the line between what an emergency is and what’s not an emergency. Now, let’s go to step number 5.

Cut Costs To Put Money In Emergency Fund

The fifth step is simply to cut costs so you have more money to put towards your emergency funds. See, it’s going to help you tremendously, guys, if you’re able to fund your emergency fund with the extra money that you have. And why not cut some expenses so you have more extra money?

So either bring in more money, guys, or slash some of your expenses. Or you can do both, right? If you really want to make this thing grow fast, whether that’s adjusting your insurance coverages, maybe it could be cutting out some of the subscriptions that you have that you don’t use, eating out a whole lot less and cooking at home a whole lot more, or maybe you simply ask for a raise at your job. Right?

Dip your toe into the job market on the regular basis with your resume that’s up to date every six months so you can see that if your skills are paying more.

Sometimes, guys, we get stuck in a job that’s paying us this amount, but the market for our skills is this amount. But we’ve been here so long, we’re comfortable.

Maybe you need to have or look for another job so you can bring in some more money. Or you may have to just sell some stuff, get a side hustle or side gig, or maybe at your current job, work some overtime to bring in more money.

But you’ve got to take these measures to try and make more money or try to cut some expenses that’s going to help you increase the rate at which you can save, which makes this thing go a whole lot faster.

Now, speaking of saving more money fast and slashing some expenses, let’s go to number 6.

Minimize Your Housing Expenses

Number 6 is an even more dramatic cut of your expenses. In number 6, guys, I suggest that you minimize your housing expenses.

Now, this is a little more dramatic, but if you want to save money fast, sometimes you’ve got to do things that are drastic.

So you may consider reducing your housing cost by a lot. Housing, rent, mortgages, that’s where most people spend a large percentage of their money.

If you’re somehow able to cut that down, guys, you can find a lot more money to put towards your emergency fund.

2 things happen when you change your housing expenses and you dramatically cut it.

The first thing is this: now you need a lot less money for your emergency fund, right? Because now you don’t need $1,500 for rent.

You may only need $750 for rent. And secondly, you have more money to get that accomplished faster, right? Because now you can save a lot more money fast because you don’t have the large housing expense.

So whether that means move in with somebody, take on a roommate, maybe house hack where you rent out a part of your house that you live in, or maybe you get a roommate, maybe you move in with family, friends, relatives, whatever it may be, guys. Now, speaking of that, let’s go to number 7.

Consider some other ways to increase the amount of savings

The seventh step that you can take is to consider some other ways to increase the amount of money that you free up to put towards your savings.

Perhaps you can pause or pull back on the amount of money that you’re investing right now. Now, I always suggest you at least get the company match if where you work actually gives you a match to a 401(k) or 403(b) or something like that.

But if you can’t get the match, perhaps you still put only 3 to 5 percent of your money towards investing, but no more, right? You don’t want to be putting thousands and thousands of dollars every month towards investing, but then you have thousands of thousands of dollars that you actually need to reach your fully funded emergency fund, right?

So you may have to sacrifice that to get the emergency fund funded faster. Or maybe you want to pause or slow down paying off any debt that you have.

Now, for some folks, they want to put debt, savings fund, fully funded savings fund, but that’s totally up to you. Perhaps you can switch that and put your savings first and pay off your debt when after you fully fund your emergency fund. Or you can say,

“Hey, I only want to partially fund an emergency fund, maybe $2,000, $3,000 to get me going, but then I want to pick up everything else.and then slowly pay towards a fully funded emergency fund shortly thereafter.”

Right? Totally up to you. But sometimes you may have to take some additional measures that are a little more drastic to get to where you want in terms of reaching your emergency fund goal.

Hey, some of you may already have $10,000 or $20,000 laying around in another account that may be earmarked for something else, and that’s cool too. But perhaps you pull that money to use to fully fund your emergency fund fast.

Right? Hey, guys, everyone’s situation is different.

Personal finance is personal.

Hey, you can do this. And don’t forget, guys, if you ever have an emergency, you want to replenish that as soon as possible. Hey, as I said, let me know in the comments below.

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