How To Build An Emergency Fund On A Low Income
Our Experts weigh in on how to build an emergency fund with low income. Plus 7 ways to get you started.
Our Experts weigh in on how to build an emergency fund with low income.
Growing up I was broke. Like mattress on the floor broke. But I wasn’t poor. I just didn’t know better. Its was a mindset.
As I switched over this mindset, I realized one of the first things I needed was an emergency fund. But on a low income that seemed out of reach.
But again, it was mind over matter. While paying bills (ALONE) on a part time waitresses income I was able to put back an emergency fund. Albeit small— but it saved me.
What is low income?
If you have to ask, it might be you. (Kidding).
But seriously, low income is relative. You could make a decent salary and not have any left over for savings. Or depending on your area and responsibilities, “low income”, may mean something very different across the spectrum.
What is an emergency fund?
An emergency fund is your oh sh!t money. It’s the funds you will need when an unexpected expense comes up.
Why is an emergency fund a big deal?
It’s a big deal when an unexpected expense comes up and your choices are to put it on a high interest credit card or to pay it with your (you guessed it) — your emergency fund.
What is an emergency fund for?
The emergency fund is specifically for life unexpected expenses. Think, emergency vet bill, tire blow out, insurance deductible for an accident (medical or otherwise).
Everyone needs an emergency fund, no matter what you make, single, married, kids or a cat lady. Because no matter who you are or your socioeconomic status--life will happen to you.
Failure to prepare is preparing to fail.
How much should I save?
To start your emergency fund the most important thing is to start. Leaving $20 in your glove compartment for gas (I’m not kidding), this was my first attempt at an emergency fund.
That grew to $100, later became $500– and for me that was the money spot. But I was also single, in college with very few bills.
Now that emergency fund looks a lot different. I have dogs, a baby, a mortgage and my most expensive asset— my husband. (He golfs, nuff said).
Best 7 Ways to Save for Your Emergency Fund When You’re Practically Broke
So, you’re pinching pennies till they scream and still want to save for a rainy day? Sounds like a magic trick, but it’s totally doable. Let’s break it down to the nitty-gritty of building that emergency fund from scratch—because, let’s face it, unexpected expenses wait for no one, and they definitely don’t care about your current bank balance.
- Get Creative with Your Cash
First off, let’s play detective with your budget. Think you’ve cut back all you can? There’s always something more. Those sneaky little expenses hiding in plain sight? Time to uncover them. Maybe it’s that subscription service you forgot about or the daily latte habit.
Every penny saved is a penny closer to your emergency fund.
- The Power of Micro-Saving
Who said you need big bucks to start saving? We’re talking about setting aside small amounts. Like, skipping that extra snack or walking instead of Ubering for short distances. Consider apps that round up your change on purchases and save the difference. Before you know it, you’ve got a stash.
- Turn Clutter into Cash
Look around. Got stuff you don’t use? Sell it. Online marketplaces are your friend here. That old guitar collecting dust or those clothes you swear you’ll fit into again? Time to let them go. One person’s trash is another’s treasure, and in this case, your new emergency fund contribution.
- Side Hustle Your Way to Savings
No, you don’t need to start a full-blown business. But a little side hustle? Perfect. Use what you’re good at. Babysitting, dog walking, freelancing online—every gig adds up. Plus, it’s money you won’t miss since you didn’t have it before. Directly funnel these earnings into your emergency fund.
- Automate to Accumulate
The “out of sight, out of mind” approach works wonders. Automate a tiny portion of your income straight to your emergency fund. Even if it’s just a couple of dollars every paycheck, you’ll be surprised how quickly it adds up without you having to think about it.
- Reward Yourself—Responsibly
Saving for an emergency fund doesn’t mean you can’t have fun. Set small, achievable savings goals and reward yourself when you hit them. Just keep the rewards simple, like a movie night at home instead of a night out. It keeps the motivation up without breaking the bank.
- Community and Resources
Never underestimate the power of community. Here at Salt and Pepper Finance we share our best tips and strategies for saving on a shoestring budget. Plus, you might find free resources 👀 that can help you stretch your dollar further.
Starting an emergency fund when money’s tight might seem like trying to fill a swimming pool with a teaspoon. But with a bit of creativity, determination, and these handy tips, you’ll find yourself paddling in your financial safety net before you know it. Remember, it’s not about the size of the fund; it’s about taking that first step and keeping at it, no matter what.
What’s next?
After you have your emergency stash, it’s time to start chipping away at your debt. Build that budget, make your plan and get after it.
Start with our free budget binder or our biweekly saving plan if you need some guidance.
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