How can you build an emergency fund if you don’t have one? Some known ways to reach this first (of many?) targets.
We all know that having a cushion is very important, it relieves stress and you don’t have to review your finances that often. In the personal finance literature, they advise you should cover 3 – 6 months of expenses. You can start from 1 month and go from there. It’s difficult if you’re living paycheck to paycheck and can barely keep up.
That’s why you should start with your first € 1.000. Knowing it’s doable doesn’t mean you’ll know how to get there. There are a few things you can do to achieve this goal. It’s all about consistency and habits. You’ll crush your target easily.
Setting up automated transfers has the advantage that you don’t have to think about saving itself: should I save or should I buy that luxury thing? A few ways:
- Saving a low amount per week into your savings account.
Thinking it’s a low amount so it won’t change much is wrong! Getting started can make you feel more in control of your financial life.
- 52-week challenge or 12-months challenge
You can play it like a game: 1 € in the first week and double it each week (saves you € 1.378) or € 0,5 first month and double it each month (saves you € 2.047,50 a year)
Using an app
There are a lot of apps you can use to help you save money. Simply registering your expenses can make you feel responsible for it. I don’t use these, but they exist (personal capital is often used by our American friends for example). I’d rather use a simple excel spreadsheet to do so. Registering my recurring expenses helps you think more about them, think about buying that coffee each day when going by train to your work. € 2 x 20 days x 12 months adds up to € 480! How insane is that? I don’t say you shouldn’t buy this coffee, if it’s important to you you can do just that. To me constantly buying that coffee is insane, you can drink coffee on the job and at home very cheaply but that’s just me…
Payday: pay yourself first!
When it’s payday and you receive your salary, you can automate your savings from your checking to your savings account. Doing this won’t make you reconsider it and after a while you won’t miss it.
Separate and secure place for savings
One should save his money into an account that’s not attached to your checking account. If it’s attached you can access it easily and transfer money to your checking account and you’ll be tempted to spend it on things that are not needed or non-emergent.
Get rid of useless stuff!
Nowadays, minimalist or clutter-free living is trendy! Living your life free of excess stuff can also be a big boost to your savings if you live simply. Just keep the things that add value in your life and get rid of anything that doesn’t and/or just fills up space. By doing this, you can pursue things you want to do, even finding income-producing activities.
Furniture and other objects
Go through your home and look for the things that can give you a full refund. Less clutter and a bigger savings account!
Then sell the things you don’t want anymore or don’t have any use for. Selling on Ebay, facebook markets, Craigslist, do garage sales… will give you easy money for these items.
You can also review your subscriptions and services you don’t use or want anymore. When you are not sure about it, use it for another month and otherwise cash the money you’d spend otherwise. This can be Netflix, magazine, HBO-account, your mobile data etc… Cancelling that Netflix-account or some other streaming service can get you more quality time with your loved ones and even “get paid” for it. You can share a Netflix-account with a lot of people so it won’t cost that much.
Starting a side hustle
Trying to start a side hustle is often one of the fastest ways to reach your savings targets because this adds up to your usual paycheck.
You don’t must be an entrepreneur to do this but it helps! You can use things you already have: renting out vacant rooms in your house, renting that car out on a car-sharing site. Using your free time to go babysitting, pet walking, working in a restaurant or bar, be a referee in sports games…
Asking your friend or family can help you on your mission, people need stuff done all the time and you’ll be surprised what they will pay for it.
Go on a spending diet!
You can choose, for a specific period, not to spend money on unnecessary things. You can:
- Clip coupons (groceries, 1+1 on products…)
- Buy in large quantities and freeze your excess food
- Don’t use the car and go to work by bike or on foot or commute and reduce fuel costs
- Renegotiate your bills (such as energy, water…)
These are just a few examples you could implement to reach that first € 1.000 goal.
Just get started!
People sometimes overthink what’s the best thing to do, sometimes taking action is the best option. Only those who try will become in life! You’ll get started and might reach your goal sooner then you think and feel fantastic upon reaching your destination!
What have you done to reach that first milestone?