If there’s anything that the current pandemic taught us, it’s this: An emergency savings fund can help you weather any unexpected crisis that comes knocking at your door. If you’re just starting out on your savings journey and you’re wondering how to navigate saving during this challenging economic time, you’ve come to the right place.
Bulking up your emergency fund is not only wise, but it’s also the right thing to do–and will save you potential heartache and stress. You might think that saving is impossible with everything going on right now, but that doesn’t have to be the case. While it’s by no means easy to save during economic challenges, it is very possible and also very necessary.
Eager to get started? Here, we’re doing a deep dive into bulking up your savings to save for uncertain times.
How much you should be saving right now:
Traditionally, you’re encouraged to hold 3 to 6 months’ worth of expenses in an emergency savings fund. That wisdom still holds today. However, if you, like millions of other Americans, have been hit financially by the pandemic, you will want to have more in savings. Generally, the less stable your income is during a downturn, the more savings you will want to have in your back pocket to survive.
To determine how much you personally need to save, you’ll want to start by putting together a budget. A budget will serve as a road map in determining what your income and expenses are and how much you have leftover to save. In general, financial advisors recommend a 10% savings rate. However, during leaner economic times, it might be prudent to save more than this.
Where you should keep your savings:
You should be able to access your emergency funds very easily. Therefore, you’ll want to keep them in a simple savings account or a money market account. Emergency funds are specifically for that–emergencies. If your money is tied up in the stock market, and you have an urgent situation, you’ll want to have the quickest access to it as possible.
How to bulk up your emergency savings fund:
Assess your big-ticket expenses
One of the fastest ways to boost your emergency savings? Re-evaluate your big-ticket expenses. Sure, it’s wise to cut out your weekly coffee splurge and save some dollars here and there. However, the truth is something as simple as cutting down your high-ticket expenses such as rent can result in huge savings. Moving from a $1,000 / month home to a $700 / month home can result in $3,600 saved in a year. While moving is a big commitment, it may be well worth it!
Sell items you no longer use
Another quick way to beef up your emergency fund: sell unwanted items. You will no doubt have old electronics, clothes, accessories, collectibles, books, and more that you simply don’t use. You can easily sell items on sites like Amazon or eBay or even Facebook Marketplace. Once you do sell your items, be sure to quickly put the funds away into a secure savings account.
Find a side hustle
A surefire way to boost your income is to find a side hustle you enjoy. Side hustles are a perfect way to boost your income usually while working on your own schedule. There are a ton of side hustles you can pursue such as teaching online, working as a VA, walking dogs, or even working in the gig economy. The opportunities are endless and you’ll no doubt find a position that works for you.
It may feel daunting to find work during the pandemic, but keep in mind that in any economy, there are always winners and losers. Some industries are experiencing lots of growth and you’ll want to focus your efforts there.
An emergency fund is a key financial tool regardless of whether you’re in a good or bad economy. Emergencies do happen and it’s always best to be prepared for them. By following some key steps and watching your budget more closely, you’ll be well on your way to boosting your emergency funds. Once you do, you’ll have greater peace of mind to weather any storms.
Did these emergency savings tips help you? Tell us your thoughts and ask Bola your questions in the comments–and for stylish markdowns, shop our Sale!
Bola Sokunbi, the founder of Clever Girl Finance, is a Certified Financial Education Instructor, money expert, CEO, and best-selling author. Sokunbi aims to help women like you take charge of your finances, stop living paycheck to paycheck, build real wealth, and get you in control of the life you really want to live.
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