Almost every article you read about debt reduction advises you to put a minimum of $1000 into an emergency fund. Many articles even offer advice on how this can be accomplished by cutting expenses and saving change. This is about how to put money into an emergency fund when expenses are already cut to the bone and your monthly expenses more than equal your income. The hard cold fact is that if you don’t have enough income, you need to create it and designate that income for your emergency fund.
To start off, let’s reduce the emergency fund goal to $500 until all your bills are current. This amount should cover any relatively minor repairs to automobiles, appliances, etc. Remember, the emergency fund is only for real emergencies.
Next, set a realistic goal of when you would like to have accumulated $500 in your fund. If you have reduced your emergency fund goal to $500 then you probably will not be able to designate $100 a week to your fund and reach your goal in 5 weeks. However, it is for emergencies and if you are like me, they won’t wait 6 months to happen. Let’s say that we are going to set a goal of 3 months.
Once you have a goal date in mind, break down the time into weeks. For our example, 3 months would equal 12 weeks and $500 divided by 12 is $41.67 which is a much less intimidating amount than $500. Before you decide that you cannot save that much a week, read the next few steps. If you absolutely feel that you cannot manage that amount, extend the time but remember that the goal is to establish an emergency account as quickly as possible.
Now that we have an amount that we think we can live with, or in this case without, you can look at ways to increase your cash flow every week by that amount. There are endless number of ways that you could earn $41 but here are a few:
1. Have a yard sale.
2. Go through those extra boxes and sell unused or unneeded items on Craigs List or ebay.
3. Take advantage of a talent that you have or craft that you make.
4. Take on an extra job such as baby sitting, yard work, house cleaning, etc. (Remember it is only for a few months)
5. Work a few extra hours at your current job.
Once you have gotten started, you will find that you build your own momentum. Those few dollars sitting in your emergency fund will give you a feeling of peace and security and you will find that earning or saving the next $500 will be much easier.
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