Today in Twin Falls, Idaho, it's 48 degrees and the wind is blowing. It's only blowing 23 mph now, but it's expected to blow upwards of 40 mph by the end of the day!
Last week I discussed the importance of setting a great financial foundation by preparing and sticking to a budget each month. Did you draft a budget? What are you excited about? What are you anxious about?
This week, we’re going to tackle Baby Step #1 and some of the questions I get when coaching around this Baby Step. Baby Step #1 is to SAVE $1,000 AS A STARTER EMERGENCY FUND. This idea may sound simple enough but here are some things to consider.
The emergency fund should be in an account separate from your checking account. It is for emergencies.
The money needs to be readily available. It should not be considered an investment. Don’t get too concerned about this money not earning a bunch of interest. This is meant to protect you from Murphy's Law. You know the one that says, anything that can go wrong, will go wrong? Something unexpected will happen and I want you to be ready for it. It turns the emergency itself into a financial inconvenience instead of a financial hardship onto of the actual emergency.
What IS an emergency? Major and unexpected house repairs (hot water tank replacement or furnace repair), car repair, travel to be with ailing family member or to celebrate their life, cell phone replacement and/or urgent vet bills.
If you’re wondering how to save $1,000, here are a few ideas:
You can cut some of your expenses (subscriptions, memberships, food, dining out, entertainment and/or vacation)
Sell some stuff. Many of us have more than we could possible every use. Consider what you have that truly brings you joy and keep that. Use Facebook Marketplace to sell anything that has a value of $25 or more.
Pick up a side-gig. There are lots of ways to work remotely. Consider driving for Uber or Lift, or working another part-time job. Make sure that your new side-gig isn’t costing you more money than what you’re earning. This applies especially to delivery jobs.
If you’re in a place where you have your emergency fund intact and you’re wondering what’s next, great! Stay tuned for next week’s post.
In the meantime, if you find yourself needing to dip into your emergency fund, it is a best practice to replenish that before returning to whatever baby step you’re on today.
What’s next for you? Let me know (monica@coaching-freedom.com) how you’re going to save a few dollars over the next week.
If you don’t have at least $1,000 in your emergency fund, I challenge you to save $100 within the next week.
You’ve got this!