Thursday, December 15, 2022

How To Build Your Emergency Fund

By Tim Gamble

In my opinion, the top two financial goals for most folks should be setting aside an emergency fund, and paying off high-interest debt items such as most credit cards and car loans. Between the two, I would actually prioritize the emergency fund until you have at least $1,500 set aside. Most money experts suggest having an emergency fund of at least 3 to 6 months of expenses, but that is a large number and a daunting challenge for many. The $1,500 goal is more realistic. You can always add to it later. 

Don't stop making your minimum payments, of course, since late fees and penalty interest rates add up extremely fast. But put any extra money into the savings for now. Once you have an emergency fund, then you can tackle the debt with extra payments. 

Your emergency fund should be kept in a a separate account (savings or money market) from your checking account and ONLY used for emergencies. You may need to wait until you can meet the minimum balance requirement to avoid fees, but move the money into a separate account as soon as possible. (By the way, big banks tend to have high minimum balance requirements. With smaller amounts, you may be better off at a credit union or a small community or regional bank.)

Don't worry about getting the top interest rate on your emergency fund. Safety and liquidity are your goals for your emergency savings, not growth.

Ideas For Raising Cash For You Emergency Fund

This is a great time of year to start your emergency fund. Some folks get a end-of-year bonus. If you do, then use that bonus to build your emergency fund. If you are getting a raise in the new year, then earmark a portion of that raise towards your emergency fund. Do your taxes ASAP after the new year, and use your tax refund for your emergency fund. 

If you loaned money to a friend or relative, it is time to collect. Asking a friend or family member to pay back money you've lent them is uncomfortable, and may lead to some icy Sunday dinners at Grandma's, but it is your money after all. And you need it.

Do odd jobs. Can you sew, tutor, mow lawns, bake, babysit, or do "handyman" jobs? Do you have crafting skills? Post or handout fliers around your community. 

Consider starting your own "Man-and-a-Truck" business. If you have a pick-up truck or van, you can rent it & yourself out for a lot of odd jobs involving moving or hauling. Most people don't have a truck, yet most people will need to haul something somewhere at some point. And they probably need an extra pair of hands (or two). If you also have a dolly or hand-truck, you'll be especially popular. Posting flyers around town and word-of-mouth are great ways to promote your business.

Get in the habit of spending less than you make, and make savings a regular part of your life. This will mean making some personal sacrifices. As Dave Ramsey says, “If you will live like no one else, later you can live like no one else.” This may mean brown-bagging your lunches, eating out less often, avoiding impulse purchases, downsizing your cable TV package, cancelling Netflix...

Do whatever else it takes to build your emergency fund - hold a yard sale, sell that exercise machine you don't use, sell that ATV or other expensive toy,  work extra hours or even get a second job.

The Scriptures - This new English translation includes Genesis through Revelation, and restores the Name of our Creator to the text in each place it occurs. This new version in English is a literal translation by Institute for Scripture Research, overseen by Dr. Chris Koster. New in this 2009 edition: Improvements to the text - seeking a yet closer equivalent to the literal meaning of the original language. Quotations / Allusions from the Old Testament are in bold type in the New Testament, and are accompanied by the text references - aiding your understanding of the original contexts, and how they influence the writers drawing upon them.

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