Saturday was my dreaming of a rainy day fund. I told my husband I wish I could work just to save for a rainy day. It could be our “play money” and all the money that comes from my blog and online business and services I just used to play. He! He! He tried to burst my bubble but I told him that I wanted one day to just dream it and on Sunday he could pop my bubble and bring me back to reality.
Sunday came. Reality hit.
The reality is that our economy is horrible and there is no saving for a rainy day but rather for an emergency or a back up plan. I believe we make our destiny and we can’t control everything that happens but when you have lemons, make lemonade. With so many unemployed there are great opportunities for Eco-Consultants, online entrepreneurs and for books to be written, new careers to be found or degrees to be gotten. Yes, it was Sunday and some could say I’m still dreaming but I disagree.
I know that families are hurting. Times are tough. I live in Michigan I see it. I see friends losing jobs or borrowing money from family members. Houses not being sold and foreclosures. Exactly why my play money and rainy day fund is better off becoming an emergency fund a financial cushion. When I think of rainy day fund I think of something fun to do spend my money on but Dave Ramesy says a rainy day fund is your “umbrella” .
We should all have an emergency fund. A sum of money set asides for the unexpected. A sudden illness or unexpected life event that throws us for a loop and we suddenly A natural disaster, an accident, death or some other unforeseen event. Instead of preparing for a rainy day these days we should prepare for the worst and that means sacrificing the “play” money
Three to six months of income set aside is what should be set-aside in an emergency fund for a cushion to help you and your family survive bad times. Not easy to accomplish six months of savings that large but if anything ever happened you will be happy you have it. Wise bread has a great post on determining the size of the emergency fund which is helpful seeing we all have different debt and responsibility.
This means planning and goal setting to achieve the end result but with the following tips, creating this emergency fund can help you green your life style and give you some financial security. For other great tips see Zen Habits and CNN Money.
1. Online Banking. Look at your financial income each week or bi-weekly. What is your take home amount? Decide on a dollar figure that you will automatically deposit into your emergency fund account. With my online banking I can regularly set a online transfer to happen from one account to the next on a monthly basis. No driving, wasted deposit or transfer slips and thus you are already saving money and helping the environment by using your time wisely with online banking! I suggest starting with an amount that isn’t too large and growing it, as you feel comfortable.
2. Use the library. Most people either don’t budget for entertainment or spend whatever or they do budget and don’t keep close tabs on the movie rentals and dinners out. This can quickly add up. Decide to forgo entertainment that cost money for three months and use the money for your emergency fund. Go to the library and check out books, videos and DVD’s. Many libraries even host story times and events. Connect and unplug and you’ll save money. This is my one weakness, so I’m speaking from experience.
3. Change. Empty the pockets and keep a change jar. It adds up very quickly. At the end of three or six months you’ll be surprised at what the amount in the jar. There are change machines at local grocery stores but banks are free, save every penny and after it’s counted have the teller deposit it for you. I love taking my change jar back, it’s a family event because we try to guess the amount. I never win, I’m always guessing too low!
4. Reduce, Reuse, Recycle. Yes, green will help you save green. Forgo the new and hit the resale shops. Have a yard sale and put the profits towards your emergency fund. Reduce the amount of stuff you think you need and begin making your own cleaning supplies and. Reducing your grocery bill and printing out coupons from websites like equals more money in the emergency fund. Reducing your driving, using your lights less often, turning, unplugging unused items, it all adds up to a waste of energy and money!
5. Rewards. Set goals and reward yourself. If you’re emergency fund should total, for example, $18,000 and decide that for each quarter you save you will go out to a movie and dinner night or better yet, splurge on a nice dinner at home and have some friends over. Celebrate your accomplishments but don’t let them set you back.
An emergency fund is something we can all use. Have you started your fund? What tips do you have that can help others save money for a financial cushion?
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