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envelope to hold cash for an emergency fund

Imagine. It’s nine days before your next paycheck, and your bank account is close to nil. That’s okay for now – you’ve already paid your mortgage, insurance and water bills, and you have a few bucks in your wallet for pizza delivery, a trip to the gas station, and other such “necessities.” But wait. The next day, your refrigerator goes out. As Murphy’s Law would have it, all your food will spoil if you don’t get it fixed immediately.

emergency-fundsEnter the emergency fund, a savings account that covers three-to-six months of expenses. It’s there in case of an emergency: job loss, appliance repair, medical bills and other unexpected costs that hit you out of nowhere. We all experience financial upheavals in life. The emergency fund is designed to cover you in such cases – providing a safety net for expenses while helping you to avoid new debt. The most important note about the emergency fund? It’s for emergencies only! A shoe sale – even the most awesome of shoe sales – is not an emergency. Earmark this money for financial situations that would have a major impact on you and your family. Save up for the shoes – outside of your emergency fund.

This seems easier said than done, as many of us have tight budgets and little extra cash to share. However, small contributions can really add up over time. We’ve got nine tips to help you get started with your emergency fund:

Make Monthly Deposits

Treat contributions to an emergency fund like you treat other household bills. Make a monthly deposit that fits within your budget, even if it’s a small amount. Stay committed and make them a priority, just as you pay your gas and electric bills.

Maximize Your Tax Refund

If you receive a refund on your taxes, there’s no better place for this “surprise” money than your emergency fund.

Seek out Cash Gifts

Instead of more “stuff,” ask your friends and families to give you cash for birthdays and holidays. This may feel funny or tacky, but it’s not… money is tight for most everyone right now. Loved ones who are in a position to give gifts, want to give you a gift that will make a real difference.garage-sale

Sell Your Stuff

Take inventory of your house and yard. Surely you’ll find plenty of items – clothing, furniture, sporting equipment, musical instruments – that are taking up space in your closet or garage. Host a yard sale or sell household items you no longer use on eBay or Craigslist . Those old golf clubs may be worth $100 or more to someone who’s just beginning the sport.

Sell or Trade Gift Cards

Many of us carry around gift cards for stores and websites we never visit. Utilize websites like CardCash to sell your gift cards for cash. Alternately, you can trade them for gift cards to grocery stores or gas stations. In this case, use the gift cards to make monthly purchases, and then transfer the cash you would have used on those expenses to your emergency fund instead.

Get a Part-Time Job

This tip is perhaps less palatable than the rest, especially for those of us who feel maxed out already, but consider it a short-term solution with major benefits. Do something on the side – deliver newspapers, work at a bookstore, or pick up freelance projects outside of your day-job – and deposit your pay into your emergency fund. You won’t have to do it forever, and soon it will yield a fully funded emergency savings account.

Downgrade your Cable Service

This, too, is a temporary fix. Many households spend a disproportionate amount of their pay on platinum cable packages. Forego those premium channels for a few months to bolster your emergency account. Also consider cutting the cord subscribing to a streaming video service instead.

Start a Coin Jar

A coin jar could yield $50 or more each month. Place your loose change in a jar each night. Instead of raiding the jar for parking meters and vending machines, wrap your loose change in coin wrappers and stow them away. Put this “extra” money in your emergency fund. You can also enlist coin collections from the entire family to bolster savings

Pack a Lunch

Eating out is fun. Unfortunately, it easily runs $5 to $10 dollars a day, or more. That money adds up over the course of several months. Consider taking a lunch to work and use your ‘out to lunch’ money as a way to build an emergency fund.

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