My family has experienced our share of financial setbacks, usually some major medical bill, a vet visit that turned into a your-cat-needs-surgery visit, or that car inspection didn’t exactly go my way. If you’re not prepared for these curve balls that life is sure to throw at you, it can really set you back or knock you down altogether. Today I’m welcoming Jenny Silverstone from MomLovesBest.com to See Mom Click to share her practical tips on how to build an emergency fund.
Becoming a parent is a life-changing event and the most rewarding thing you’ll ever do. The reward, however, won’t be directed to your bank account. That will be drained as fast as your baby sucking down her bottle in a midnight feeding.
It’s expensive to have a baby, and it doesn’t get any cheaper as your child gets older. The best thing you can do to prepare yourself for the financial shock of parenthood is to begin stashing money well before your baby ever arrives. But that isn’t always the easiest thing to do if you are paying off student loans or still working an entry level job.
Why An Emergency Fund is Necessary
You never know when life will throw some unexpected setback your way. That’s when an emergency fund will come in handy.
If your washing machine breaks or your daycare provider increases her prices, you’ll need to be prepared. And if your child is like many others, she’ll likely have at least one emergency room visit for high fevers or a bad cough in her early years. Kids are constantly catching new illnesses and that can be very costly for parents.
Having an emergency fund will give you cash to tap when emergencies occur. And you’ll be grateful for that security. Instead of worrying about how you’re going to pay for your emergency, you can rest easy knowing that money is already in the bank.
Building a cash stash is much easier said than done however. It takes willpower and some creative thinking, especially when your budget is already stretched thin. Here are some tips to start you on your way.
Set a Goal Amount
The key to sticking with something is setting an attainable goal. You don’t want to expect too much — you wouldn’t try to tackle Mount Everest the first time you climbed a mountain. Likewise, you shouldn’t set your savings goal too high. Instead of going for a $10,000 goal, start with a goal of $1,000. Once you reach that, set another $1,000 goal.
All in all, you should eventually strive to have at least 3 months of your salary in your emergency fund. That will help cover you in case you ever lose your job or face significant medical problems.
Allocate Every Spare Penny for Your Emergency Fund
This part requires the most willpower, and it’s where people often lose their way. You need to get in the mindset of saving your money, not spending it. You’re not doing this for fun — you’re doing this for your future, for your child’s future. So you need to take it seriously.
Here are some ways you can build up your emergency stash:
- Choose diapers carefully: When your baby is born, you’re going to spend a small fortune on diapers, there’s no doubt about it. But by doing your research before hand and considering either cloth or generic brands, you could reduce that amount considerably. Other smart ways you can save on diapers include switching sizes slowly, buying in bulk and joining memberships programs such as Amazon Family, which offers 20% off diaper subscriptions.
- Stay away when people are sick: Nothing can tank your progress faster than medical bills. Your best bet is to avoid illness in the first place — both for you and your baby. Don’t feel bad about telling family and friends that they’ll have to reschedule a visit if they’ve been sick.
- Shop garage sales: Baby clothes and gear is expensive, especially when you consider how fast they’ll grow out of it. Look for garage sales or secondhand shops whenever you can. Local consignment sales offer great bargains, too!
- Cut cable: With so many cheap viewing alternatives out there like Netflix or Hulu, you might want to consider dropping your cable service. You can save more than $100 a month. Even if you make no other sacrifices all year long, you’ll reach your $1,000 goal in 10 months without cable.
- Take care of your stuff: Doing the basic recommended maintenance on things like your car and your house can save you big money down the road. If you let things snowball, they’ll often become bigger and more costly problems.
Before long, you’ll be well on your way to hitting your savings goal. When you get there, you’ll be proud of the effort you’ve made and you’ll be setting a great financial example for your child — and that’s worth all the money in the world.
Jenny Silverstone is just another mom trying to do her best. She loves making lists and trying to help others find what they are looking for. When she’s not using her powers to find her kids missing socks, you can find her sharing the latest parenting hacks & finance tips on MomLovesBest.com and on Pinterest.