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Emergency FundBuilding an emergency fund should always be a priority. It should even come before building a college fund for your children. Think of it like this: how much comfort will you take knowing that your child has a college fund if you can’t pay the mortgage after losing your job or being laid off? Knowing that having an emergency fund is important does not make it any easier to build one. Saving money is often hard to do, especially when you feel strapped for cash to begin with. Here are a few ideas that may help you find the money to build your rainy day fund.

Set An Achievable Goal

I have seen quite a bit of advice about how much to have in your emergency fund. Depending on the person offering the advice, the amount ranges from three months of your bills, to six, even twelve in some cases. That is a lot of money, so the goal seems daunting. Try breaking it down into small chunks. Why not start with a goal of having one month’s cable bill on hand. That is about $100. Break that down into, oh let’s say five payments. So, you would end up with a goal of putting $20 per paycheck into your savings account. If you have that amount direct deposited, you may not even miss the cash on payday.

Take Advantage Of Your Bank

There are some banks that are offering savings help. No, they are not giving you money. What they are doing is rounding up your purchases to the nearest dollar and depositing the change into your savings account. So, if you spend $23.74 using your checking account, the bank will round that to $24 and deposit 26 cents into your savings account.

Compound Your Savings

This is an idea I have seen in dozens of places. You start out by putting one dollar into your savings account. The next week you deposit two dollars and so on. By the end of one year you are putting $52 into savings and you have saved $1,500. I have not tried this personally, but many people claim success using this method.

The Pennies Count

This is a method I have been using for years. I put all the change I collect each day into a jar. Once a month I deposit all of that change. I try to do it on a Friday, before getting paid. The reason I do it on Friday is that I take all of the ones I have in my wallet and deposit them as well. Trust me, there have been a lot of Fridays when all I had was a few singles left over. It has worked for me. I recently spent $5,000 on a car and paid cash for it out of my savings account. The money build up slow, but it does build up.

Make Money With Your Hobby

My hobby is writing. I did not have a clue what to do with a hobby like that until a friend opened a newspaper. The newspaper was not successful, but I did get to sound off a few times and enjoyed having the work read. Eventually, I found a few freelance gigs and started making money. This will only help you save money if your main job is paying the bills. If it isn’t, this is a good way to make the ends meet more comfortably.

Discourage Yourself From Spending

There are plenty of ways to do this. Try hiding your credit cards. Put them someplace secure, but inconvenient. I put mine in a locked toolbox in a locked shed in the backyard. The walk out there has given me time to reconsider using the cards on more than one occasion. Another idea is to break a purchase down into the number of hours you have to work to pay for it. Say you want a new television. The 70 inch screen sounds awesome, right? Now, divide the purchase price by your hourly wage. How awesome does it sound now? The 36 inch flat screen next to it sounds a lot better, doesn’t it?

Building an emergency fund is important, but may be impossible until you have a solid, workable budget. Often a budget can help you find the money to build the emergency fund with. It may also help you find ways that you are wasting money without realizing it.


About the author: Jerry Coffey


Jerry Coffey spent many years in a debt-riddled gray area somewhere between broke and desperately broke. His seemingly endless need for more and more cash led him to payday loans, repossessions, bankruptcy, and depression. After years of the same financial style, he heard a piece of advice that inspired him to find a way to change. The advice: ''The very definition of a fool is someone who continues to do the same things, but expects different results.'' This led him to a much more frugal lifestyle that sees all of his bills paid on time and a growing savings account. Even the seed of a retirement account has begun to sprout.


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