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How To Build An Emergency Fund When Times Are Tight

by Alonzo on February 3, 2012

When you’re struggling just to pay the bills, the last thing on your mind is building an emergency fund.

In fact, nearly two-thirds of Americans have less than $1000 in savings.

But just because we’re having trouble making ends meet doesn’t mean fate will pass us by. Washing machines break, car alternators fail, and pipes burst whether we’re struggling or not.

So how do you prepare for those inevitable moments of crisis? I asked some of the experts on Twitter.

@Singlema suggests that people take advantage of the flush times in order to prepare for the lean periods. “In the same way animals prepare for the winter, store up your reserves for when you need them,” she advises. This can be as simple as resisting the urge to spend your income tax refund and instead placing it into savings. Bonuses, pay raises, and financial gifts can also spruce up emergency funds.

Barbara Friedberg (@Barbfriedberg) advises people to make the hard choices. “It’s worth it in the long run,” she says. I completely agree. Of course you may have to sacrifice some of the things you like or have grown accustomed to, but having an emergency nest egg makes it worthwhile. Her final bit of advice: Take it “Bit by bit.”

You don’t have to create your emergency fund all at once. Creating your emergency fund is a work in progress. Saving even $20 or $30 a week allows you to slowly build a cushion of financial security. Small simple changes matter. Consider these tips:

Learn to trim the fat.

You may be struggling and think you don’t have the money, but ask yourself, have you really trimmed all the fat?

I’m amazed when people complain about the state of their finances but then I see them eating out at KFC or McDonald’s. Fast food is nearly two to three times as expensive as home cooked meals.

Super-size you’re emergency fund instead by cooking at home. If you’re pressed for time, cook several meals on Sunday and place them in the fridge or freezer for use during the week. This simple tip alone could easily save you $40 a week.

Likewise, take a close look at the rest of your spending. Scrutinize it with a fine tooth comb.

  • Have you called around to negotiate a lower auto insurance rate?
  • Are you utilizing all of your cell phone minutes? Could you switch to a cheaper plan?
  • Could you do a better job of avoiding the vending machines at work?
  • How good have you been at consolidating trips to save on gas?
  • Could you switch to a credit union to avoid high bank fees?
  • Have you considered visiting the hair salon every three weeks instead of every two?

The truth of the matter is that once you scrutinize each and every expense, you’ll discover ways to save that you never even considered before.

Put the little “luxuries” on hold.

If you don’t have a small emergency cushion saved you shouldn’t even consider going to the movies. Not when you can rent free videos from the library. Same goes with meeting friends for drinks, going out to the club, or engaging in a little “retail therapy.” Building a financial life raft is just too important.

To help with your “luxury fast” realize it’s only temporary. Once you have your emergency fund in place you can always return to the little luxuries you enjoyed so much. Besides, you may just find some new low cost or free ways to have fun.

Sell some of your stuff.

One woman’s junk is another woman’s treasure. You’d be surprised at how quickly your old futon or Ikea shelf sells on Craigslist. Books and textbooks can be sold on Amazon using their third party seller services. Likewise, Ebay and consignment shops can turn your old fashions into cold hard cash.

Find a side-hustle.

Are you a school teacher? Perhaps you did well in college Chemistry 101? If so, tutoring could bring you some nice cash. But don’t only think in traditional terms. Your skills might prove valuable. You’d be surprised at how many people would pay you to teach them how to use WordPress, Photoshop, or Microsoft Excel.

Websites like Craigslist make it easier than ever to advertise your services. Just make sure to meet your clients in a public location.

Freelance writing, reselling vintage clothes you find at thrift stores, pet sitting, and website design are just a few of the other ways could earn some serious money. (For a great read on creating your side-hustle check out the How to Start a Side Hustle series by Rosetta Thurman, founder of

L. Marie Joseph, author of First Generation White Collar, frequently reminds people of the African Proverb: “Save your money and one day it will save you.” When it comes to building an emergency fund no truer words were ever spoken.

Your turn. How do you save for emergencies when times are tough?



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