To save an emergency fund is like personal finance 101. It is the first thing you should save for, and an emergency fund can help prevent you from going into debt, or finding yourself in financial difficulty. Here are five unique ideas for you to build an emergency fund. You likely fit into one of these five categories of money management, so there are ideas how to save an emergency fund for everyone!

Saving an emergency fund is pretty much personal finance 101.  It is the first thing you should do for many different important reasons.   Individuals who do not have emergency funds are FAR more likely to go into debt or find themselves in financial difficulty.  We don’t want you to face financial difficulty, so this article will hopefully help you!

Many individuals don’t have emergency funds for various different reasons.  It may be a lack of discipline, a lack of extra income for the household, a lack of understand of why you need one.  Either way, you have not been able to save the necessary amount of money.

AMASS

This article will go over five different ways to save your emergency fund depending on how you react to money.  These five unique ways to AMASS your emergency fund include ideas for the following types of people – you can figure out which one you are!

  1. The Amateur – You are disciplined but just need to learn the basics.
  2. The Moneyless – You have too little income and this is holding you back from saving your emergency fund.
  3. The Automator – You like the idea of doing a lot of work to automate your finances up front, then coasting.
  4. The Spender – You can’t control your spending.
  5. The Slacker – You really don’t care enough to sit down and figure all this savings and emergency fund stuff out.

As you can see, our five different categories of people spell the acronym AMASS.  And this is exactly what we are going to help you do – AMASS that emergency fund!

Saving an emergency fund 101

The very first threshold you should aim for when saving your emergency fund is a minimum of $1,000.  This is a very low amount of money for many individuals, and once you reach the $1,000 threshold, you should try to increase that number to 3 months of your expenses.

Once you hit three months of your expenses, you can celebrate!  But, don’t celebrate too hard and spend too much, because you should keep going until you reach six months of you expenses in your emergency fund.  This way you will have wiggle room if you lose your job, have an unforeseen large expense occur, have medical problems, or if many other potential problems occur.

This article will break down five unique ways to help you save your emergency fund.  These five different ideas are prefect for the five previously mentioned sets of people who have not built their emergency funds yet.

1. The Amateur

The amateur is someone who is new to thinking about their finances.  You don’t necessarily have to be a new graduate or new to the job market.  Maybe you just haven’t given your financial future much thought, maybe someone else has managed your finances up to this point, or maybe you have been preoccupied with other things.  Whatever the reason, don’t worry, if you are an amateur with your finances, you can learn easily how much you should be saving for your emergency fund.

The first thing you need to do is create a budget if you don’t already have one.  If you need a budget worksheet, you can receive a free one with your email here!

You may like to read my article on how I built my budget here: How to Budget – Remember, Shakira’s Hips Don’t Lie!

Once you have your budget in place, you need to try and reach your first $1,000 savings threshold.  This shouldn’t be too hard, but if you are having a difficult time finding extra money for the month, you can read this article on how to reduce your expenses: 29 Simple Ways to Save an Extra $4,000 This Year

Once you reach that $1,000, you should keep going!  Try to get to 3-6 months of your expenses eventually.  Maybe this takes a couple years, but just keep chugging along and you can get there!

2. The Moneyless

Let’s face it, there are many people who just don’t bring in much extra income each month.  The moneyless are those who are living paycheck to paycheck and are struggling with their current wage.  If this sounds like you, don’t fret!  You should read the article I mentioned above to see if you can reduce some of your expenses: 29 Simple Ways to Save an Extra $4,000 This Year.  And you should know that there are many potential opportunities to earn some extra income each month.

Here are some articles I have written that may help you discover the perfect side hustle opportunity to get your emergency fund built up.  There are many extra income opportunities you can literally start today, and there are some that you can get started with within a week if you need to.

Here are some opportunities I have written about:

While these are just potential opportunities from articles I have written, you can also try opportunities including:

  • Teaching English online
  • Working as a virtual assistant
  • Working as an at home call center agent
  • Selling your photographs
  • Freelance writing

These are just a few ways people earn extra income each month.  Once you discover the opportunity that is right for you, you can start doing your best to save enough each month.  If you save an extra $100 per month, you will reach your $1,000 emergency fund in just 10 months!  If you are able to make more than $100 per month, you can get to this goal even quicker!

Once you hit the $1,000 threshold, keep going until you get to 3-6 months of your expenses.  Once you hit 6 months of expenses, you may want to keep making that extra money and reallocate it to an investment account to start saving for retirement!

3. The Automator

The automator is the individual who enjoys setting up their finances so they just automatically save each month.  They love the idea of putting a little work in up front so they can forget about needing to save each month.  The automation creates the framework so that you can easily save at the end of the month without doing any additional work.  I like to call this the lazy saver because you don’t need to do much to save once you set up this process!

This is an article I wrote about how you can automate your finances:  Voilà – How to Automate your Finances to Save Money

When you are done automating your savings, it will look like one of these two visuals:

Save money

 

Save money

 

 

 

Automating your savings is not only great for saving your emergency fund, it is able to go further than that and help you save for retirement and pay off debt.  Automating your savings is one of my favorite ways to put your savings on autopilot going forward!

4. The Spender

There are many spenders in this world.  If you are a spender, you know who you are!  Remember, if you are a spender, it is not something you can’t tackle head on.  I believe the envelope system is the best way to save an emergency fund if you are a spender.  The envelope system allows you to segregate your expenses into different envelopes.  This allows you to better keep track of what you spend money on, and it prevents you from spending frivolously on items and using things like credit cards.

I have gone on the envelope system multiple times in my life and each time I have done so, I have saved money.  This is a visual of how my personal envelope system works each week.  I segregate my spending into two categories: groceries and fun.

This is a visual of what my personal envelope system looks like:

My Envelope Budget Saving

At the start of each week, I add the amount I have given myself to spend for that week on those two categories.  As long as I don’t go over this allotted amount, I will save money because I have budgeted in my savings.  If I spend less than what I have added to my envelopes, I will, of course, save even more for the week!

Here is an article I wrote on the envelope system: Why the Envelope System Is the Best Budget to Save

If you are a spender, I highly recommend you go on this envelope budget!

5. The Slacker

Finally, we have the slacker.  The slacker is the person who just doesn’t have any desire to put a system in place to start saving so they can save an emergency fund.  The slacker doesn’t care about learning how much they should save, or how to put a plan in place.  For this reason, many of the above options won’t work for the slacker.  They will not sit down and create an envelope budget, they will not do the work to automate their savings, and they don’t have much motivation to do side gigs, or to calculate their budget.

Since none of the above ideas to save an emergency fund will work for the slacker, we need something that will take an extremely short amount of time to setup and something that will automate itself.  I believe the best way to do this is to get an app called Acorns.

Acorns App

Acorns will round up the change you spend on transactions and add it to an investment account for you.  This way, as you are out spending during the week, you don’t have to think about saving.  The app will automatically save money every time you complete a transaction.

For example, if you purchase a coffee at Starbucks for $2.40 and use a card connected with your Acorns app, Acorns will automatically round up that transaction’s change to the next dollar.  In our case here, the app would round up the transaction to $3.  That means that $.60 ($2.40 + $.60 = $3) would go to your Acorns account.

The only negative of this is the fact that it is an investment account.  Since you are saving for an emergency fund, you don’t want to take risk with this money.  So you want to add your Acorns money to the least risky investments available for Acorns.  Choose the conservative portfolio and you will have mostly bonds and few stocks invested.

If you want the Acorns app for free, you can sign up here for the Acorns App and get $5 added to your account!

Here is an article I wrote about the Acorns app: The Acorns App – Get Your Undisciplined Ass to Invest

 

Well, I am all out of ideas!  I hope you fall into one of these categories and have benefited from this article.  Don’t worry if you have trouble saving – many of the ideas mentioned can have a tremendous impact for you to help save your emergency fund, and even save more going forward into the future.

Thanks for reading!

 

Does anyone fall into these categories?  Does anyone have trouble saving an emergency fund?  Did I miss any categories?!

 

Disclaimer: These are the ideas and opinions of the author.  The author is not responsible for the actions of those who read the posts on this blog.  Each individual reader has a unique situation and unique needs.  This blog is not intended to solve those unique situations of the readers.  This blog is not liable for decisions made by the readers of this blog.

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