One of the reasons that financial emergencies become financial disasters is because there are no monies set aside for the urgent and unexpected. If you are looking for a place to start establishing financial security, building an emergency fund is the first step. In fact, having at least $1,000 in your emergency fund can keep your finances afloat as you work on building other areas in your financial life.
Here are the steps to get your emergency fund to $1,000 within three months.
Step 1: Work the numbers
If you want to build your $1K emergency fund in three months, that means, you want to stash away $333.33 every month, $83.33 for 12 weeks, $16.65 Monday through Friday for 60 days, or $11.90 Monday through Sunday for 90 days.
Step 2: Step it Up!
Open an online account specifically for your $1k emergency fund. Here are three online banks if you are looking for some direction:
1.Capital One 360 www.capitalone360.com
2.Ally Bank www.allybank.com
3.Smarty Pig www.smartypig.com
You can also go to GoBankingRate.com to get some more comparisons. This strategy is especially helpful for folk that like to dip into their accounts for unimportant events. Online accounts take at least two days for you to gain access to money. So, if an emergency comes up and you don’t have access to the money, you can easily put the payment on a credit card and earmark payments from the emergency fund right away.
If financial discipline isn’t your issue, you can maintain a separate emergency fund in your traditional brick and mortar bank.
Step 3: Automate it!
Automate withdrawals for $83.33 weekly from your accounts. If this distribution doesn’t work for you, automate a distribution that makes the most sense for your payment schedule and bills schedule. For example if you get paid on the first and third Fridays of the month, you can stack up the savings that way.
First Friday: $75
Third Friday: $125
Fourth Friday: $83
Step 4: Monitor and Let it Marinate!
The power of automation is that you take yourself out of the equation. It eliminates you having to remember the who, what, where, when, and how. Also, when you set up automating savings, you are paying yourself first. You can treating your savings like one of those bills that you would never forgo paying like mortgage, electricity, or your car note. This action alone embodies an MIT (Most Important Thing) money mindset: You don’t put yourself last when it comes to building your financial future, you put yourself first. Basically, you are saying, “I am just as important as Verizon, Chase, or Sallie Mae.”
Good luck with starting your financial foundation; it’s easier than you think when you create systems and structures designed for you to succeed.
HAVE YOU EVER TRIED ANY OF THE MONEY CHALLENGES? DID IT WORK? TELL US IN THE COMMENTS!