Couple Money

The Smart Way to Build Your Emergency Fund

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Most people know having some savings is a smart money move, but don't have enough stashed away.

Learn the smart way to build and grow your emergency fund!

How to Build and Grow Your Emergency Fund

Having a financial cushion is a goal of many families as they are building their finances.

Emergency funds are essential buffers when unexpected things happen, such as job loss.

How, though, can you get started with it? What do you need to do to protect yourself?

You can watch me break them down in this week’s Marriage and Money Tips or check out my take right below!

How Big Should Your Emergency Fund Be?

The first thing many people wonder about is the right amount for an emergency fund.

Most financial gurus recommend you have 3-6 months of expenses in your account.

If you're looking for something more tailored to your family's needs, then there are several factors to consider when determining your emergency fund.

If you're still stumped than shoot for 3 months worth of expenses. Should you lose your job, your family won't have to panic as you try to find employment.

If you're in debt, please have a starter emergency fund on hand before you go ahead and pay down your debt.

Where Should We Save Your Money?

The next decision you two should make is where you need to deposit your money. With an emergency fund you need to focus on 3 things:

Here are some brief thoughts on some of the top places to open your account with. Look around online to compare savings accounts.

You should be able to find something to suit your needs.

Credit Unions and Community Banks

Since credit unions are nonprofit and member-owned, you can usually get a competitive rate on your savings accounts.

We use Coastal, a local credit union, for some of our savings and have been really happy with them.

Online Banks

If you do most of your banking from your phone or desktop, then looking at online banks for your savings is a smart move.

Without the overhead of branches, they can offer higher rates on their savings accounts. Here are a few popular options:

Find what works for you and stick with it.

Finding the Money to Build Your Emergency Fund

So you're fired up. You know how much money you need to have in savings and where to put it. Now you're looking for ways to get money for it. How do you do it?

It's not glamorous and for some, it can be painful, but the first thing I'd recommend is cutting back on unnecessary expenses.

Let's face it, for many people (myself included) living beyond their means is why they are living on a tight budget with little or no savings.

I had to face the facts and change my spending habits. My husband was a tremendous help and together we were able to simplify our lives (while still enjoying it).

Another wonderful option that can really jump-start your emergency fund is selling all your clutter.

You'll clean up your house, make some cash, and you won't have to reallocate your monthly cash flow.

If you're serious about making some money, Baker has just release a guide to turning your clutter into cash.

Continue Saving While Paying Down Debt

Once you have a starter emergency fund ready, you may feel like you should go full throttle on paying down your debt, as Dave Ramsey has encouraged people to do.

I suggest that you continue to set aside some money for building up your emergency fund at the same time.

Debt Free Adventure has a wonderful 75/25 method accomplishing both without burning yourself out.

Thoughts on Building an Emergency Fund

I'd like to hear your thoughts.

How have you been able to work as a couple and build your emergency fund? What other financial goals are you tackling together?

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