failing to plan is planning to fail

My number one golden rule to help families begin to succeed financially is “Start and maintain an emergency fund.” This is a non-negotiable first step to financial security.

But how can you start an emergency fund when the bills keep you one or two steps behind every month? When there is always just a little too much month for the money, it is even more imperative to save for a rainy day. Another excuse I hear often is, “How can I save for emergencies when emergencies keep happening and depleting our income?”

If any of this strikes home for you, keep reading. I am going to help you start with a very basic $1000 emergency fund.

Before we talk about how, we need to talk about why. What is so magical about an emergency fund? Imagine you have $1000 sitting in savings and…

  • Your car breaks down
  • An appliance goes kaput
  • A kid gets really sick
  • You lose a cell phone
  • The dog vomits all over your couch and carpet
  • Someone steals the bike you ride to work
  • Your car gets a flat tire
  • You miss two days of work without pay
  • Etc.

stop asking family or using credit cards

With an established emergency fund, there is no need to beg from family or use credit anymore. You can stay on track with your budget and use that $1000 to save the day. You also now have the skills to quickly (4-6 weeks should be your goal) build the fund back up to $1000 (or more) ready for the next crisis.

Without an emergency fund, most families respond to crises with a credit card. When the credit cards have been maxed out because of too many emergencies and an inability to repay them, people turn to family or online fundraising. Eventually, this can all lead to bankruptcy, sheriff’s sales, evictions, and foreclosures. I’m not trying to be bleak, but the truth is there will always be emergencies. Failing to plan for these is a recipe for disaster.

Now that you are fully convinced that you need an emergency fund, I’m sure you are shaking your head wondering how on earth to save $1000. Stick with me. If a widow with 5 kids living on Social Security can do this, you can absolutely do it too!

step one:

This week, open a free savings account in a different credit union or bank from where you normally do your banking and deposit as much as you can, but at least the minimum required amount. I have seen families start with a $5.00 deposit. This is like planting a seed in a garden. Then keep reading because I’m going to help you learn how to fertilize and water it. (Make sure you read the fine print and there are zero fees attached to this account.) See hint number one below for a great way to get a nice boost on your savings.

step two:

Schedule a family meeting. Everyone old enough to walk and talk can be part of planning for financial success. And what better way to teach your children how to manage money rather than allowing money to one day manage them. At this meeting you will write down a minimum of 3-5 ways that you are going to save $1000 over the next 4-8 weeks. Let me assure you as a very low-income single-parent, I have personally used most of the following strategies to build or replenish my emergency fund. They really work!

step three:

Build an emergency fund! And keep it separate from the rest of your money.

25 proven strategies that you can choose from to build your emergency fund:

  1. Open a free bank account for your new emergency fund with a reward. I got $75 for opening an account once. Nice start to the fund! Recently this same credit union offered $100 for new accounts and $100 for the referring member. I referred 9 friends who each got a $100 start on their emergency funds! (I got a $900 boost for mine!) No catch.
  2. Sell things on Marketplace or Craigslist. $25-$300 Have everyone walk around your house for 15 minutes and gather things that you really don’t need and can be sold. You will be amazed at what people are excited to pay you to take off your hands. See my article “Safe, Successful, Selling on Facebook Marketplace.
  3. Have a yard sale. These are both a ton of work and a lot of fun. If you have large items and a good location, you may be able to make between $100 and the full $1000 in a weekend. Hint: Let your kids contribute by setting up a lemonade or ice cold water stand.
  4. Utilize your talents. And inform family and friends what you are saving for. Bake. Knit. Babysit. Sew. Help people move. Odd jobs. Yard work. Make meals. Clean. Fix things. House or pet sit. Etc. One year we baked sourdough bread and sold it to friends and family earning $2500.
  5. Sign up to participate in a survey or focus group. I got $75 for this.
  6. Do a family fundraiser. You can sell chocolate bars, flowers, wreaths etc. Just like all the school kids do. We have made several hundred dollars each time we did this
  7. Set aside a portion of your tax return as an emergency fund. This one feels like cheating because it’s so easy. See my article: How to make your tax return earn money for you.
  8. Use shopping apps and points to save for a fund.

9. Institute a spending freeze. This means no non-essential expenditures. ZERO

  • No coffee out
  • No fast food
  • No restaurants
  • No extra driving
  • No trips
  • No fancy nails
  • No salon or barber haircuts
  • Etc. etc.

Every penny of that savings goes to the emergency fund. You can do this for 4-8 weeks. Hint: When you see just how much money you saved you might get addicted to making your own coffee, cutting your own hair, and eating at home.

10. Cut back the grocery budget for a month or two. To save big-time, download the free “30 Days of Dinners for Under $150” budget meal plan.

11. Eat the cupboards bare.

My kids don’t love this strategy, but boy does it work, and I have a grand time with the challenge. This involves no grocery shopping except for necessary consumables like produce and milk and eggs. Take an inventory of all the food in your house. That old can of soup, the bag of dried beans, lasagna noodles, the roast in the bottom of the freezer, etc. Then make a meal plan using only (or almost only) these ingredients for at least two weeks.

Hint: if your kids don’t love it, they will be all the more grateful for your normal cooking when the challenge is done. For better buy-in from your tweens or teens, frame it as a challenge that they get to video and post on YouTube. No one is likely to watch it, but they will feel awesome and famous. My kids have eaten some pretty interesting things with this as their incentive.

12. Get a temporary job.

13. Host an exchange student.

14. Save all your change in a jar. This is how we bought a new bed.

15. Return things you didn’t really need. This is a great strategy for raising some quick cash. Walk around your house looking for recent purchases that you kinda regret or really just don’t actually need. And …. Wait for it…… take them back to the store for a refund. I have also used this when a bill was due and I had no money to pay it.

16. Recycle phones and metals etc. For cash. Before you throw anything out, check if you can get even a few dollars for it. Scrap metal places will pay you for items that you would have instead paid your trash company or the dump to take off your hands. This is a win, win, win situation.

17. Sell or consign your used nicer clothes at local consignment stores, or online used clothing apps. This takes a bit of organization but once you have a system can bring in steady cash. 18. Donate plasma. Anyone old enough can participate in this and the first month is usually the most lucrative with bonuses for starting.

19. Buy and resell used items if you have an eye for value and a bargain. 20. Become a part-time Lyft, Uber, or Uber Eats driver.

21. Teach a class for a small fee. You have valuable skills or knowledge – share them.

22. Rent items you own that others could use, a trailer, bike rack, kayaks, canoe, skis, pickup truck, specialty tools, etc.

23. Mow lawns.

24. Cook meals for an elderly neighbor. Save them from frozen dinners. Make them feel cared about. Cook an extra portion of what your dinners are and charge $100 a week.

25. Rent out a room in your house to someone who needs a place and can contribute to your household and to your emergency fund. It rarely takes more than 4-8 weeks to establish a solid emergency fund. Then, every single time you have a real emergency, simply revisit this list and quickly fill the fund back up ready to save the day the next time you have an emergency.

Note: You will want to work towards a larger emergency fund eventually. But $1000-$2500 will be all you need to get started.

Final Tip: You may have asked yourself why the fund needs to be in a separate bank or credit union. This is to assist you with only using your emergency fund for true emergencies. If you have to think about it, and literally drive to the other bank to get the money, you are much less likely to spend that money on a fake emergency like:

  • Snacks
  • Dinner out because you were really tired
  • Last-minute birthday gift
  • Christmas (Christmas is NOT an emergency)
  • That really cute outfit that’s on sale
  • Coffee cuz you’re sooooo tired today

By not having a debit card for the emergency fund account and having to actually drive to get the money out, you will preserve the intended use of the account and secure your financial future. And you will enjoy the added financial security the emergency fund provides.

Please send your stories of success and tell us how your family built and maintained an emergency fund!

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