Our emergency fund is DONE!!!!
We officially saved an $1000 emergency fund in 6 weeks. Yeah, that’s right. I said 6 weeks.
How in the world did we save $800 in 6 weeks??
Well, let me just tell you how. *Note: not all of our ways are typical for everyone, we got a bit crazy. Even though we’re getting crazy with our financial goals, doesn’t mean that craziness is the only way to succeed. But it does help.
Before you even start saving for your emergency fund, decide where you want to keep your saved money. Whether it’s in a normal savings account, a high yield savings account, or a jar if you’re old school keep it just for your emergency fund. Don’t let it be your savings for everything. It’s even easier if you later decide to save for other reasons to open an account for each savings goal. You can find more on our multiple savings accounts here.
The key here though is to have one place for your emergency fund, and don’t touch it once you have it filled. Anyway, on to how we saved our emergency fund in six weeks.
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Don’t pay extra payments on debt until emergency fund is done
The debt snowball is baby step 2. When you’re still building your emergency fund, you’re in step 1. It’s not wise to move ahead while you’re building an emergency fund. You’ll be in an endless cycle of trying to save, having an emergency and then you can’t make a debt payment at all.
While you’re building your emergency fund it’s best that you make the minimum payments on your debts. That way, all extra money you have goes towards savings and you get it done faster.
Once your emergency fund is finished, you can then put that extra money towards your debt snowball. But until then it’s focus on baby step 1 time.
For us, this meant that our minimum debt payment was $700. You can find out more about our current debt payoff here.
Make a budget
If you haven’t made a budget yet, now is the time. This means that you plan to spend your money in a certain way based off of your expected income. Now you may think that is difficult if your paychecks are different every time. Neither one of us have a full salary yet, so that’s what we deal with.
But it’s not! Actually, it may mean you can save money even faster!
First, make your zero based budget planning out every single penny that is to be spent in the month. You want to add up what your household income is every month (or every week if it is extremely tight) and look and ALL of your expenses. I calculate our fixed expenses (spending that is the same every month) first, and then our variable expenses to see how I can adjust the variable expenses. You don’t have a huge say in your fixed expenses unless you cut out things completely, but you have a ginormous say in your variable expenses. You then put the planned cash for your variable expenses in your cash envelopes and stick to your budget. Sticking to your budget is the most important part here.
If you have a variable income, you can easily budget for the lower estimate of your income and then put what you have extra at the end of the month towards your savings. If your guess is way off, then that means you can save super fast!
When you get unexpected money, save don’t spend
So you budget your income to be about what it normally is. I like to budget for it to be less by a $100 at least than the highest it usually is. That way, when I have $100 extra a paycheck that I didn’t budget for it goes into savings. I try not to spend the extra money on things that I don’t absolutely need.
While using that method can give you extra money every single month, it also helps when you get refunds that may be larger. Robert is going to school right now, and ended up with a large refund at the end of the semester because he didn’t use all of the grant money he received.
Did we spend it? Heck no! We saved it in our emergency fund! We actually do the same thing with our tax refund every year. Before we even get it, we have a plan for what it’s going to. For example, with our tax refund we put at least $1,000 away towards our financial goals. The rest goes to whatever project, most often on the house, we want to tackle that year. It’s one reason why I don’t hate to do our taxes.
Save money with deals, put your savings in the emergency fund
We are always making sure that we get the best deal on things that we buy. Check out how we saved $200 on groceries without using coupons! My favorite thing to do is shop around.
The most important thing to do when trying to save money on deals is to not waste those savings on buying other things. Don’t get me wrong, it’s totally ok to treat yourself, but what feels better in the long run? A fully funded emergency fund or that scoop of ice cream?
I know, that’s a hard one. Especially after I just finished some double chocolate ice cream at home. But let’s move on.
The small savings that you put in your emergency fund really add up over time. You can easily put in $15 here, $20 there instead of trying to wait until the end of the month to put all of it in your emergency fund. Nobody does well with temptation, otherwise they would call it fun. It may mean that at the end of the month, you are $100 away from $1000 rather than $400.
Put tips and bonuses in savings
Robert makes tips while working at Starbucks. I get a monthly bonus at my job and I also get extra cash from designing party invitations at my Etsy store, GingersnapInvites. All of that extra money is not put in our budget because I can never even guess how much it’s going to be. It all fluctuates from month to month. It’s extra and therefore can’t be counted on to stay regular.
Because that money is not in our budget, I consider it extra money and it goes immediately into savings. Even once our emergency fund is done, all of this money will be split up between our other five savings accounts (yes, I said five. See why here). It may even be used for our debt snowball eventually, but that depends on how much extra we get.
Well, that is how we saved our emergency fund in 6 weeks. If you have any other tips or questions with any of these tips above, let me know in the comments below!
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