Over the last few weeks, much of the southeast has felt the direct hit or impacts of Hurricane Matthew. Meteorologists predicted this storm would result in significant damage to life and property, and as a precaution, some 2 million people in North Carolina, South Carolina, Georgia and Florida were asked to leave their homes.
As I listened to the early reports, I could not help but pray for the families receiving this bad news.
I also began to think of how many people could actually afford to leave their homes. Sometimes it’s not financially feasible to pack up the family, gas up the car, drive to another city or state and pay for a hotel room until the worst is over.
For most, that’s a financial stress that is not easily managed.
It made me think all the more about preparation. When life happens, we have to be prepared for unexpected events as common as a flat tire to the uncommon such as a mandatory evacuation!
One of the ways we can prepare ourselves is to have an Emergency Fund.
Most Americans do not Save Money
A lack of savings tops the list of financial worries in many American households. Every 1 in 3 American families reports having no savings at all, including 1 in 10 of those with incomes of more than $100,000 a year.
This recent Pew Trust Emergency Savings Report is an eye-opener. And it’s scary.
With numbers like this, it’s no wonder some people lock down, refuse to leave their homes and pray for the best.
But it doesn’t have to be this way.
Imagine your New Day
If you are not sure how to start building your Emergency Fund, use these 3 simple steps to get started TODAY!
Establish the amount you would like to save in your Emergency Savings.
What goal is reasonable and obtainable for you? Oftentimes, people give well-intended advice but if it doesn’t make sense for me, it’s not an appropriate fit. For instance, asking most people to save 6-months of living expenses in a savings account will simply not work.
My position is this… if saving and keeping $250 is a MAJOR win for you (I mean life changing!) then kick the life out of that goal! Your goal!
Go into it with all you’ve got because getting beyond a financial life on the edge is achieved by consistently saving money!
Quick, decide right now what amount you could save over the next 3-6 months that would change your life! Is it $250, $500, $1000 or even $3000?!
Now, go for it!
2. Open a savings account separate from your regular checking account.
When I first started saving money, I wondered why I would spend it so easily. DUH…it was in my checking account! Without some type of control or restraint around my savings, I was prone to spend it.
Ideally for convenience, your savings account should exist at the same institution as your primary checking account. However, if the minimum required account balance prevents you from starting an account there, you should consider a credit union or an online bank. There are several online banks with $0-to-low account minimums, mobile check deposits, and are FDIC insured.
Always ensure your bank, online or traditional, is FDIC insured.
3. Fund your savings account by eliminating non-essentials.
I am a major proponent of finding money. In other words, what am I doing with my money today that I could stop doing all together or drastically reduce.
That’s right, it’s time to get creative and start cutting those nice-to-have expenses so that you can put breathing room in your monthly finances. When determined, you would be surprised how many ways you can find to save money.
Here is a list of 10 ways you can find extra money to reach your savings goal.
Cut the cable – try NetFlix, Hulu, Sling or read
Bag lunch at work – no eating out
Cut the vending machine visits
Do nails and hair at home
Make coffee and chai tea at home
Consignment shopping for any required shopping
Meatless Monday meals
Cancel the gym membership
Stop accummulating any late fees you might be currently paying
Cancel monthly or annual club memberships
Once you find this money in your daily and monthly spending, make a shift in your mind and behavior so that all of it funds your emergency account. Once you get on a roll, you will find other creative ways to keep more of your hard earned money.
Be systematic (almost robotic) about quickly moving money into your savings account. Then, be just as diligent not to spend it unless a true emergency presents itself.
You can do This!
Use this step-by-step plan and empower yourself to kick-start your Emergency Fund.
Then, when life happens, you are better prepared to manage the unexpected with less stress and anxiety!