It’s Frugal Friday! The time when we take a few moments to focus on tips and hints for frugal living.
A little preparation can be a life-saver if bad luck hits your family. When you’re on a “Shoestring Budget,” it doesn’t take much in the way of unplanned expenses to throw a working budget out of whack. That’s why it’s important to build up an Emergency Fund: a stash of cash you set aside and only touch in the case of a true budget-busting emergency.
So how much should you have in your emergency fund? It depends on what your budget looks like, how much wiggle room you have each month, and how much you could realistically absorb within that monthly budget without causing you to miss an important bill. Financial guru Dave Ramsey recommends setting aside an emergency fund of $1000 before paying down other debt, and this is a good target for most people. It’s enough to offset many emergencies that could come your way, and is a good safety net for unforseen needs so you can have some peace of mind as you direct other income toward your financial goals.
If you have a high-deductible insurance plan or other possible reason to think you might need more set aside, you can adjust to meet your needs. Ramsey also recommends that once any high-interest debt is paid off, you set aside 3-6 months’ worth of income as your “fully-funded” emergency fund so you’ll be ready for anything life may throw at you.
$1000 can seem like an unreachable target when you’re already pinching pennies. How can you make that happen? Here are a couple ideas:
- Challenge yourself to cut back on grocery shopping 1-2 weeks a month, living off what you have in your pantry and freezer and only buying fresh necessities like milk, bread, and produce. Stash the extra grocery money.
- Cut out restaurant spending until your emergency fund is established. Eating out can add up quickly!
- Take on an extra short-term job (babysitting, temp work, seasonal employment, whatever you can fit into your schedule)
- Have a garage sale
- Sell items on Ebay, Craigslist, or one of the many Buy/Sell/Trade groups on Facebook
- Take a load to a consignment store; both kids’ and adults’ clothes can bring you some extra cash. Find a handy list of Northeast Ohio stores HERE.
- Do you have any skills that could convert to a little extra cash? Crafts, baking, organization, house cleaning, even scrapbooking…you may find that people who don’t have time to do these things for themselves would be willing to pay for your help.
- Extra income from outside the budget: gifts, cash-back rewards (like Ebates, Ibotta, Checkout 51, SavingStar, or Shopmium), tax refund, any other “out-of-the-ordinary” money that comes your way can be applied toward your emergency fund rather than a splurge. Less fun? Probably, but having that safety net there when you need it could prove to be priceless.
Any other suggestions for beefing up or starting an Emergency Fund? We’d love to hear your ideas. Please share in the comments or on Facebook!
If you’re just joining the Frugal Friday series, check out these other posts:
- Tracking Your Spending
- Creating a Budget
- Making Frugal Choices
- Fighting Spending Envy
- Could You Cut the Cable?
- Saving on Food Expenses
- Schedule to Save (keeping track of due dates to avoid fees & penalties)
- Staying Organized with Holiday Shopping & Rebates
- Frugal Lovin’ (Love & money, plus date night on a Shoestring Budget)
- Waste Not, Want Not (buying what you’ll use, and using what you buy)
- Frugal Fashion
- Frugal Beauty
- Frugal Cooking tip: Prep Once, Eat Twice!
- Budget Check-Up
- Plan ahead for Christmas
- Getting by on a Single Income
- Reducing Fixed Expenses
- Free Printable Frugal Living Resources (meal planners, expense trackers, and more!)
- Saving on Gasoline
- Tips for Tax Time
- Healthy Eating on a Budget
- Frugal Living with Kids
- Frugal Fitness
- Save with Second-Hand
Megan has been frugal most of her life, but has been really honing her frugal skills as the chief home economist for her family of six, surviving and thriving on a single (teacher’s!) income. If she can do it, you can too!