By: Brightpeak Financial
We’ve established why an emergency fund is so important and how much you need to save. Next, let’s unpack how to build your fund. In four words you need to: Spend less. Earn more.
Here are ten ways to start beefing up your emergency fund, fast:
- Track it
Why is tracking your money so important? Only 1 in 3 Americans creates and implements a monthly budget according to a Gallup survey and, yet, the average household carries $132,529 in total debt. None of us want to take orders from our money or debt. We want financial strength and independence. All successful financial journeys start with a budget – consider it a map. A budget helps you spend money you have and avoid spending money you don’t have. Call Christian Credit Counselors at 800-557-1985 or visit www.christiancreditcounselors.org for help creating a budget.
- Don’t shop when you can swap
To cut back on shopping, try trading things you already own. Here are 4 swapping options:
- Thred up. Check out sites like ThredUp to save on hand-me-downs you and your kids will actually like.
- SwapaDVD. Do you have stacks of DVDs you never watch? Trade them on SwapaDVD. For a small trading fee, you can restock your shelves with fresh flicks. (If you prefer to read, check out PaperbackSwap for books.)
- Swap Parties. A trend in the world of the frugal is to throw a Swap Party. Choose a theme like clothing, kitchenware, or baby items and ask your friends to bring along similar items to trade.
- Bartering Services. Handy with a camera? Great at fixing things? A grammar whiz? These are all services you can offer instead of paying full price. In a recent survey conducted on Facebook, 80% of participants said they intend to or already have bartered a good or service to save money. Trading is alive and well — just remember the tax implications if you do begin bartering. Learn more here.
- Automate your savings
Ask your bank or credit union to transfer funds automatically from checking to savings every month. Or, automatically deposit a little from of your paycheck. What you don’t see, you may never miss. Don’t have a savings account? Consider a high-interest or high-yield online savings account to grow your rainy-day fund faster.
- Save or adjust your tax refund
According to CNN Money, the average tax return was $2,893 in 2015. While that might seem like an early Christmas present, remember you’re loaning out your money to the government, interest-free, for a year when you could have it much sooner.
The two best ways to build your emergency fund using your tax refund are as follows:
- Review your W-4 tax form to adjust how much money is withheld. This will enable you to place more of it directly into your emergency savings account throughout the year.
- Commit to saving most or all of what you do receive toward emergencies.
- Slice and dice your food budget
It’s easy to overspend on food. With just a few simple adjustments, though, you can save thousands.
In a study by The Wall Street Journal, people spend an average of $16.13 on delivery pizza. If they swapped the weekly delivery on pizza night for something like DiGiorno ($6.69 on average), they’d save $9.44 every week and $490.88 each year. Or take it one step further and make your own pizza. Not only is it much cheaper, but you can substitute unique and healthier ingredients, and create a fun event for your whole family.
Kristen at The Frugal Girl put this idea to the test and discovered that it only cost her $1.87 to make one cheese pizza at home! Adding your own toppings will fluctuate your total, but even if you added half a bag of pepperonis to each pizza (est. $3.49 per 6 oz. bag), you’d save $657.28 every year by not ordering delivery.
Some other ways to save money on food are:
- Meal planning. Try some of these $5 meal ideas to save money at home this week
- Packing lunches
- Skipping Starbucks and implementing a bring-your-own-mug policy
- De-stress for less
Instead of heading to the spa, try some basic yoga, stretching or meditation techniques at home. Do you really need that gym membership when you can run, hike, and bike outside? Remember, these sacrifices are temporary. The goal is an emergency fund that provides greater peace of mind for you and your family.
- Avoid markups
It’s alright to budget a little fun while you save for your emergency fund, but try to find the frugal alternative, especially when there are major price markups.
For example, before you head to the movie theater, consider the money you’ll pay in overpriced drinks and popcorn. Imagine what you’d save with a movie night at home — complete with a free DVD rental from the library, air-popped popcorn, and a couple sodas from the fridge.
Check out these other products with giant markups.
- Sell your stuff
One of the fastest ways to save that first $1,000 for emergencies is to have a sale. Here are several great options to try.
- Garage Sale. Here are 20 tips on how to boost your income with a garage sale. They range from having a multi-family sale, using a “free” box, and selling concessions on the side.
- Online Sites. Most people are aware of Craigslist and eBay for selling their vehicles or furniture, but another growing resource is Facebook. Search for garage sale groups in your city using Facebook’s search bar.
- Amazon. Get started listing your products to sell on one of the world’s most popular retailers.
- Bookscouter. Do you have old textbooks that are worth some cash? Price them on Bookscouter and see what they’d fetch.
- Launch a side hustle
Whether you want to add more money to your emergency fund, save for retirement or simply want more spending money, coming up with extra cash can be tricky. If your budget is already pretty tight, here are a few ways to make a little money on the side.
- Rent a room. Your vacant guest room could be a moneymaker. Websites like Airbnb and VRBO can help you rent out your extra space to vacationers and travelers looking for a place to stay.
- Get paid to drive. If you have some extra time and a reliable vehicle, get paid to be your own taxi service through companies like Uber and Lyft, or deliver food through DoorDash and BiteSquad.
- Make money online. Companies like UserTesting and UsabilityHub pay you for offering thoughtful reviews of websites. Upwork is a marketplace for freelancers of all types, and has payments methods that guarantee you get the money you deserve when the work is done. Mechanical Turk is a website run by Amazon where you get paid for performing quick, simple tasks online. Granted, it’s only a few cents per task, but with some practice, you could make a nice chunk of change. You could also become an Etsy seller or teach an online course via Udemy or YouTube.
- Do chores or home repairs. People with too little time and a little extra money will pay you through TaskRabbit for your help with chores like cleaning, grocery shopping or home repairs. Also spread the word among family, friends and neighbors.
- Pet sit or house sit. Reliable people to watch some of the things we cherish most are few and far between. Money-making opportunities await if this kind of work suits you. Check out websites like TrustedHousesitters, House Sitters America and Rover to get connected with people in need of dog-sitting and house-sitting resources.
Action step: Brainstorm your fields of interest, then begin researching a side hustle that fits your skill set.
- Get on the same page with your spouse
Make sure you and your significant other are on the same page about the importance of saving for emergencies and how much you both want to contribute. If you’re having trouble sticking to a budget or feeling guilty about your purchases, try checking out the allowance system for couples.