Save $1000 cash in a beginner emergency fund.
For some individuals or couples this is super easy. You can save that in a month (or less). But what if for you, it’s not so simple? Maybe it takes you 10 months or a year to save $1000 cash. It seems like all the cards are stacked against you and you can never get ahead. That’s where you are wrong. There is no timeline on how quickly you should complete the 1st baby step. Or for that matter, there is no timeline for you to pay off your debt either. It’s all about what you want out of life, and your money.
Driving in California, I get so worked up over people weaving in and out of traffic and I am just trying to get from point A to point B without getting seriously injured or killed. The reckless driver may have a death wish, but I certainly don’t. I yell at the other car, “STAY IN YOUR LANE.” Of course, yes, I need to be mindful of the crazy driver acting like a maniac on the freeway; but, I can just breathe deeply and remind myself to stay in my lane and stay the course. Let them go off on their own road rage tirade – I am good. I will get to where I am going in the time frame I allotted and if I happen to get there sooner, great! I have a goal, and I am going to stick to my goal without letting anyone else get in the way.
The same principle applies to saving money. STAY IN YOUR LANE. Tune out the distractions. Do not listen to what other people are doing (unless it is positive and uplifting). Save at your own pace. If you think you can be a bit more aggressive, then do that. If you aren’t a natural saver, open up a separate account that can auto-transfer funds into once per month or twice per month (whatever frequency you get paid) so you don’t even think have to about it. This will get you in the habit of saving regardless of the amount. If you do $20 on one week, do $40 another week.
Also, sell some stuff. You can use apps such as OfferUp, Poshmark, LetGo, DeCluttr. If you have old books that you never read anymore (hint college students), check out Cash4Books. This will help you get to your $1000 beginner emergency fund quicker.
The point of having this emergency fund in place is if an EMERGENCY happen such as something goes wrong with your car – i.e. flat tire, broken window, new alternator. You will want to use this stash as opposed to credit cards (see credit card blog post). You don’t use this fund to go out to eat if you forgot to meal plan for the week.
The idea of having $1000 emergency fund is scary right? Good, it should scare you. Dave Ramsey has put millions of people/families through his material and sure, they were scared to begin with, but they realized they weren’t going to stay there. It is a cushion to get you to the next step (which we will discuss later). If you have an emergency and need to use some of the funds, you go back to saving that money back up until you replenish the fund. Make sense?
Do you think $1000 cash in a beginner emergency fund is enough for you? Send me an email or post comments on Instagram. I would appreciate the dialogue.
Madsen Financial Coaching 