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I’ve gotta tell you, I read Dave Ramsey’s Total Money Makeover and I am obsessed – and completely bought in. If you haven’t discovered his Seven Baby Steps to Financial Freedom, here they are:
- Build a $1,000 emergency fund.
- Pay off debt using the debt snowball.
- Build your emergency fund to the amount of 3-6 months of expenses.
- Invest 15% of your income to retirement (Roth IRA and 401K).
- Save for your children’s college funds.
- Pay off your home early.
- Build wealth and give.
I so want to get to the third step. I seriously can’t wait until I am debt free (except for my house), but this whole process takes time. Lucky for me and my husband, we’re starting at baby step 2 because we already had enough saved – but that wasn’t always the case. We used a few strategies to build it (and rebuild it after multiple emergencies) to $1,000+ as fast as we could. Looking to build your own fund fast? Keep reading…
Why is having an emergency fund important?
To get yourself – and your family – onboard with saving $1,000, you need to know why this first step is so crucial. I totally get it. You want to jump to step 2 to get it over with, but wait! You need to have your emergency fund set up to protect you from going into more debt. Let’s say your car breaks down and it costs $650 to fix. You don’t have the money to pay for the repairs, but you need your car. What are you going to do? Most likely, you’ll put the money on your credit card or get some other kind of loan, putting yourself in more debt. An emergency fund is there for situations like these. If something happens, you have the money there to pay for the unexpected expense without having to borrow.
How can you build an emergency fund fast?
- Use your tax refund. Tax season is happening now, and many of us are looking forward to our tax refunds. Before you go spending it all, use it to build your fund first.
- Save your cashback. My new favorite thing: cashback programs! Have you heard of these? Basically, these different programs give you cash back on items you buy at the grocery store and online. My two favorite are Ebates and Ibotta. (Use those links to enjoy a $10 welcome bonus for each – that’s $20 you can add to your fund right there!)
- Save your bonus. If you get a bonus at work this year, put it towards creating your emergency fund. I know, you worked hard for that money and it’s supposed to be a treat, but if you’re serious about becoming debt free, being able to move to your next step will be enough of a treat. Trust me.
- Keep lifestyles the same after a raise. It seems that whenever I get a raise, my lifestyle changes to match my new income. What you (and I) need to do is keep your lifestyle the same. The day you get paid, transfer that extra money from your raise to your emergency fund and budget according to what’s left after. Then, it will be like you don’t even have that extra money.
- Sell the stuff you no longer need. Put all of the money from your sales into your emergency fund.
- Challenge yourself to a no-spend week or even a no spend month. Any money you save from your no spend experience gets put into your fund.
- Find a side hustle. Take on an extra job or two and put that entire paycheck towards building up to that $1,000.
- Use (all of) your time wisely. When I saved $10,000 in one year for my wedding, I used every minute I could to complete one of my six jobs. If you have an extra 15-20 minutes, visit a website testing site or take a few surveys online to earn cash.
What happens next?
Once you have $1,000 in your emergency fund, move on to baby step 2, paying off debt using the debt snowball. And if an emergency comes up while you pay off your debt, you’ll stop your snowball and concentrate on replenishing your emergency account until it is back at $1,000. Then, you’ll go back to paying off debt.
What is your best method for saving $1,000 fast?