Instead of Digging Through the Couch Cushions…

Last time I wrote about the importance of having a cash emergency fund of 3-6 months of your income.  Let’s talk about some ways of raising those funds…

The easiest way to get started on your emergency savings is to set up a direct deposit from your paycheck into a savings account.  This works well, because it’s off into the savings before you have a chance to spend it.  You can start with a modest amount of $50 or $100 dollars.  Many to whom I suggest the $100 per month amount say “I don’t have that much”.  But is that really true?  $100 per month is only a little over $3 per day.  That’s one large coffee (not to mention the fancy coffee drinks), one less cold one after work, or 10 more minutes digging through the couch cushions (OK, I’m kidding about that one).  You get the idea.  A little daily savings can go a long way toward a significant monthly savings increase.  This concept was called “The Latte Factor” by author David Bach in his book Smart Women Finish Rich.

Since we’re in the middle of tax time, let’s talk about any tax refund you might be receiving.  According to the IRS, the average refund is $3120.  Now if you’re like most people, that refund is already being spent in your mind for all kinds of neat stuff.  But if you really want to get this emergency fund squared away, you’ll put at least ½ of it away as an emergency fund.  Better, put 2/3 of it away in savings.  Hey – I’m not a monster.  Use a little for something fun.  Just don’t overdo it!

Another really common way to add to the emergency fund is to get or start a “hobby job”, part time job, or your own side business.  First, check with your current employer to see if there is any problem with you doing that.  A lot of businesses have policies against employees working in fields that compete directly with them.  Once you’ve determined that it’s OK, off you go.  Do you have a skill or talent that others will pay for?  It can be something like sewing or alterations.  My wife, who is a talented seamstress, is constantly asked to hem a pair of pants or alter a prom dress.  (She’s too nice, as she only does it for friends, and it’s usually free, but don’t tell her I said that!)  If you are handy and can fix things around the house, maybe you could hire out for those “honey do” projects that others need, but can never find time to do.  How about free-lance writing, web design, coding, or any number of other online activities?  Don’t overlook the opportunity to “flip burgers” on the weekend if you’re really serious about getting the emergency fund in place. 

This may sound corny, but what about a yard/garage/thrift sale?  It’s hard to find statistics on what the average garage sale nets, but I can say that when I moved the last time, we had a sale that raised about $2000 (thanks in part to my daughter’s old Barbie collection, and before you think I’m a mean Dad, that money went to her for her college!)  Here’s a link to an article on the website “Get Rich Slowly”, which contains some tips on conducting a better garage sale: http://www.getrichslowly.org/blog/2013/08/15/garage-sale-tips-and-tricks-or-how-i-made-2500-last-weekend/

A final idea here is to look at your budget (more on budgets in an upcoming post).  Are there things you can do to save money that can be added to your emergency fund?  We just decided to take a hiatus from television.  We have Amazon Prime, which has a ton of content we can watch.  Options like Netflix, etc. also contain a lot of things to watch that cost significantly less than cable or satellite.  Next time your contract expires, take a break and see how you like it.  You might find you enjoy reading, working on hobbies, or just sitting and talking! Seriously!

As always, if you have any questions about this or suggestions for future blog posts, feel free to email me at gedwards@cfnmail.com