How to Build Your Emergency Savings Plan

There are few things that give you peace of mind more than knowing your emergency fund can help you through the next several months if necessary. When you have $1,000 saved, you can breathe easier. And once you have several months of living expenses in your account, you can relax. There are several ways you can set aside a little bit each month.

Sell Extra Items Around the House

If you look around your home, you’ll probably be surprised at how many things you have sitting around that you can convert to cash. A few ideas to get you started can include:

  • Exercise equipment
  • Old toys
  • Power tools
  • Clothes
  • Books

Not only will this give you some extra money, but it will also help reduce clutter in your home. If you list your items at an online marketplace, you won’t even have to leave your house.

Side Hustles and One-Time Opportunities for Income

Whether you’re inside or outside your home, you can do some extra work for a bit of cash. For example, consider doing focus groups or online surveys. If you want to get out of the house, you can take care of your neighbors’ pets while they’re gone or babysit. This won’t get you rich, but several lower-paying opportunities can add up quickly.

A second job is another way to make extra bucks. Of course, taking on additional hours or being away from your family longer is probably not very appealing. However, even if you just get a temporary job for four weeks, it can make a huge difference. When it’s over, you’ll be glad you worked longer and able to contribute more to your future.

Get Rid of Debt

If you have student loans, car payments, or credit card debt, this should be a priority. For example, if you have car debt, consider canceling any add-ons, such as extended warranties. If you have student loans, think about refinancing to lower your interest rates with manageable repayment terms. When everything is paid off, you can then put the amount you were paying each month toward emergency savings.

Make Budget Cuts

If you don’t already have a budget, now is the time to make one. If you don’t know where your dollars are going, you won’t be able to effectively save them. Once you know what your expenses are, make many little cuts. This is often more significant than cutting out something larger of necessity. Instead, turn your thermostat down a couple degrees in the winter, or up a few degrees in the summer.

Cancel any unnecessary subscriptions, such as streaming services. You can often find both movies and TV shows at your local library. Whenever you can, clip coupons. Dining out is often a big expense. Even if you don’t know how to cook, there are many simple meals anyone can prepare at home. If you don’t already, bringing your own lunch to work can save you some big bucks. Getting a $5 cup of coffee before work each morning might not seem like much, but it could easily add up to over $1,300 a year.