At some point, falling behind in your finances happens to just about everyone. Most likely, you weren’t prepared for an emergency and then one popped up out of nowhere. Now your credit card statement is $2,000 more than you’re comfortable with, and just the thought of looking at your bank account produces feelings of dread. Welcome to adulthood.
Sometimes you just have to spend the money to keep standing. But why wasn’t your bank account ready? Maybe you consider your credit card a fail-safe device to be used as a backup when a financial emergency hits. Or perhaps your bank account is low because you consider some things necessities when in reality, they’re more like creature comforts.
Regardless of your spending philosophy, an unforeseen emergency shouldn’t break the bank. After all, as much as everyone would like to assume that something bad won’t happen to them, it’s almost certain that something will come up eventually.
So what do you need to do to avoid a financial crisis in the future? The answer is simple. You need to build an emergency fund to cushion your wallet when a surprise expense comes up. Whether your car breaks down or your dishwasher starts to leak all over your kitchen floor, you’ll inevitably need some cash at some point in the future. The good news is that most people can create a healthy emergency fund in a short period of time. The better news? We’ll show you how to do it in just 90 days.
How much should you save?
There are a lot of different theories about how much savings you should have stashed away. Ideally, you should aim to save up three to six months’ worth of expenses to cover your basic expenditures in case you lose your job. To figure out that number, tally up your bare minimum monthly bills, including your mortgage or rent, insurance, water and electric, etc. You could probably get away with canceling your cable, internet, and even cell phone service if you had to, so you don’t have to include non-necessities. Add up all of the necessities and see how much money you absolutely need for one month. Multiply that amount by the number of months you think it would take to find a new job, and that will equal your long-term savings goal.
However, for a short-term emergency savings fund, most experts recommend having a solid $1,000 tucked away. This is typically enough to cover most surprise expenses, like a trip to the mechanic or a broken appliance. Plus, saving $1,000 is a much more attainable goal to start off with. Once you have this amount set aside, you can then continue your savings habits and move on to loftier goals of a large rainy day fund or even aggressively paying off existing debt. So, exactly how can you set aside a quick grand in just 90 days? Let’s find out.
Step One: Eliminate the Non-Necessities
Everyone has their own guilty pleasures, but when you’re on the brink of charging your groceries or missing a bill payment, it’s time to start looking at how you truly spend your money. Start by reflecting on what you spend your money on and ask yourself if it is truly a necessity. Now is the time to be honest with yourself. Whether it’s morning coffee from the gas station or the value fry and burger you get before going home after work, scrutinize both your daily ritualistic purchases and your impulse buys. Create new routines by getting up five minutes earlier and make your coffee at home. Pack a snack to eat while driving if you have a long commute on the way home in the evening. If you cut out spending $8 each work day for three months, you’ll put away an extra $480 towards savings.
Next, look at your monthly expenditures. Do you really need a huge cable package? There are so many cheaper options to take advantage of that are worth looking into. How about that smartphone bill? Do you really need a huge data plan? Probably not. The average cable bill is around $100 but you could get just Internet for around $30. The extra savings over three months? A full $210! Cut the fat out of your monthly spending habits and focus solely on what is actually important and what is essential, like running water, food, gas, and heat.
This part isn’t easy, and it requires the most amount of discipline. It’s truly a mind shift, but it’s the key to your success. Ask yourself this: Do you think someone like Mark Cuban became a billionaire by eating out every night and buying whatever he wanted? Definitely not — he lived like a monk until he made it, as do most other self-made billionaires. Once you’ve streamlined your monthly expenses, funnel all of those additional savings into your emergency fund. With just a couple of the suggestions above, you could potentially put away $690 in 90 days — that’s more than 2/3 of the way to your $1,000 goal.
Step Two: Sell What You No Longer Need or Want
If you’ve been on Pinterest anytime in the last year or two, you’ve probably heard about the KonMari method of decluttering. If not, here’s a quick primer: Marie Kondo, a Japanese author and consultant, helps clients tidy their homes and lives by getting rid of unwanted stuff. Her method is ultimately about how you should only keep what makes you happy and brings you joy. If it doesn’t bring you joy, get rid of it. This is a great tactic to employ in conjunction with building a $1,000 war chest because you can sell your excessive things to help with that emergency fund.
You’re probably pretty uncomfortable now, but take a breath and keep moving forward. You know you have junk lying around, and it’s time to evaluate whether or not you use it or need it. Maybe someone special gave it to you, or you bought it on a whim. But it doesn’t matter where something came from if all it’s doing right now is accumulating dust and taking up space.
The solution? Sell it and put the proceeds towards something that actually adds value to your life. List your items on Ebay, post it on Craigslist, or drop it off at a consignment shop. Even if you just make twenty dollars off of something, that’s $20 closer to your goal and peace of mind. Multiply that by 10 items, and you’ve earned $200 — not bad! Go through your clothes, shoes, kitchen counter appliances books you haven’t read since college, or boxes of old kids’ toys and get creative. There might be someone out there who could truly use them. Don’t worry about getting top dollar for every single item; instead, focus on the purge. Pick one area of your home to go through each week of the 90-day process and by the end, you should have a healthy stack of cash to deposit into that savings account.
Step Three: Look for Outside Revenue Streams
Yes, you’ve already got a job. A job that no doubt drains you and leaves you pretty tired by the end of the day, and the thought of working somewhere else probably sounds like a terrible idea. But remember, this isn’t about money. It’s about peace of mind and security. If you’re barely skating by or already feel like you’re drowning, it’s time to grit your teeth and power through until you’ve met your savings goal.
It’s easier said than done if you operate by the old-world concept of finding a job; however, if you open your mind a bit and look at the world a little differently, you’ll start seeing jobs all over the place. Take a look at freelancing websites. Freelance websites operate project by project. Land a gig and you’re not committing yourself to months and months of work. Paid work may take you as little as half an hour or as long as a week or two working in the evenings. Types of projects run the gamut, so ask yourself what skill you have that you could offer clients in your free time. Whether you’ve taught yourself WordPress or simply want to do some data entry while you watch TV at night. You can even make money by writing Amazon reviews.
Working online not your thing? Then you might also consider getting a part time job where you work for a few hours on the weekend. Again, you don’t have to do this indefinitely, just long enough to build up an emergency fund. Get yourself an easy job that doesn’t throw a ton of responsibility on you. With just a little prying you’ll find something. Just scan Craigslist or your local newspaper every day.
If you live in a reasonably well-inhabited area, Uber is also a good option. You’ll need a car from at least 2004, but if you have that you’re good to go. Meet new people and get out of the house for a bit—all while making money. No matter what you choose, remember that even bringing in an extra $50 a week adds up to $600 over 90 days.
Saving an extra $1,000 in 90 days does take some effort, but the reward is that extra peace of mind you’ve got coming your way. When you’re not constantly worried about your account balance, life changes. Your heart slows down a little, you sleep better, you laugh more often, and you feel healthier. The more stress you remove from your life, the happier you’ll be.