How I Kickstarted My First Emergency Fund

If your car breaks down or you lose your job tomorrow, do you have anything to fall back on? What if you get sick and can’t work for an extended period of time?

No one wants to think about these unfortunate events, but emergencies happen and this can mean unexpected expenses. If you’re tired of living paycheck to paycheck and ready to become more financially stable, you should build a solid emergency fund.

An emergency fund acts as your first line of defense when you’re faced with unplanned and urgent expenses. Financial experts recommend saving anywhere from three to six months worth of expenses, which can be difficult and take some time. If you’re currently in debt, financial guru Dave Ramsey recommends saving at least $1,000. With that said, more than a quarter of all Americans have no emergency fund and more than half don’t have enough money saved up to cover a $500 expense.

Want to make sure you’re able to pay for your unexpected expenses? Read on to learn more.

The Importance Of Having Emergency Savings During Debt Payoff

When I was waist deep in debt and eager to pay it all off, I knew I needed to build a small emergency fund first. Why? Because if a random expense popped up, I wouldn’t have to incur more debt to pay for it.

An emergency fund also protects your cash flow and allows you to keep making debt payments. This, in turn, helps you work toward your other financial goals.

How much you decide to save is totally up to your needs and preferences. The best thing you can do is break down your big savings goal into bite-sized pieces. For example, I truly wanted a $10,000 emergency fund but decided to challenge myself to save one-quarter of that amount, which still made me feel comfortable during my debt payoff. I achieved this goal.

I established a $2,500 emergency fund during my first year of serious debt repayment. I did this in just four months. How? I did one thing that I recommend you do as well. I started paying myself first.

Start Paying Yourself First

Building an emergency fund fast is no easy feat, but when you commit to paying yourself first, it becomes more manageable. Not only that but you’ll be more likely to get the results you crave. It worked for me and it can work for you too.

The concept of paying yourself first is simple and refers to sending money straight to personal or retirement savings as soon as you get paid. Think about the first thing you do when you receive your paycheck. Do you pay all your bills? Or, do you go out for a nice dinner or buy something you want? You may think that you’re doing these things to take care of yourself, but you’re actually depleting your own funds by trading your money for unnecessary resources and services. Instead, you can keep more of your money in your possession by paying yourself first. After that, you can feed your emergency fund, save for retirement, and contribute to other savings accounts.

Many people claim they don’t have enough money to save and can’t afford to build an emergency fund. When you pay yourself first, however, that excuse goes right out the window because you’re prioritizing your own personal savings over other expenses. Before I started paying myself first, I would spend money on everything under the sun when I got paid. Then I would wonder why I had no money left to set aside in a savings account at the end of the month.

I realized my process was flawed and I would never reach my emergency fund goal this way. Instead, I set up automatic transfers to a high-yield savings account every two weeks on the same day I got paid from my job. Automating essentially meant my money was out of sight, out of mind while I effortlessly grew my account each month.

Next Steps

Once you commit to the idea of paying yourself first to grow your emergency fund, set a clear goal based on your needs. For example, how much do you wish to save and how long do you expect it to take?

Also, make sure you consider lowering your expenses, especially if you’re not used to prioritizing savings. Odds are, you will have to adjust your lifestyle and give up some expenditures in order to save more money. While you’re at it, don’t forget about increasing your income. I got a side hustle to help me build my emergency savings and pay off debt faster.

Commit to YOU

While you’re building your emergency fund and paying off your debt, keep in mind that having extra income won’t solve all your problems. You’ve got to take the first step: pay yourself first.

If you don’t do this, you run the risk of mismanaging the extra money you make, making impulse purchases and inflating your lifestyle. But, if you commit to yourself, you’ll develop a solid emergency fund faster as failure or procrastination isn’t an option.

Are you ready to grow your emergency fund by paying yourself first?

 

How to Start a Side Hustle to Save More Money

For most of us, saving money is hard.

In fact, 69% of Americans have less than $1,000 in savings, according to a survey by GOBankingRates. Saving money can be particularly challenging for millennials who are often saddled with student loan debt and just starting out in their careers. Even if you have a great job, you still might not earn enough money to save for your goals, like buying a house or starting an emergency fund.

So, how can you increase your earnings potential right now so you can save more money? Starting a side business from scratch is one possibility. However, this might not be realistic when you take into account your demanding job and limited funds. But, as the saying goes: Where there’s a will, there’s a way. Actually, there are 5 ways. Read on to learn how you can take advantage of the sharing and gig economies and start saving money right away:

1. Rent out a spare room on Airbnb.

This, of course, means you have a spare room in your apartment or house. If you do, consider fixing it up with some nice yet inexpensive decor (Target to the rescue!) and posting it on Airbnb. If you don’t have a spare room and live with roommates, you can still get creative by staying elsewhere and renting out your own room a few nights a month. I know you might dread this, but staying in your parents’ basement isn’t such a bad idea either if you’re only taking up residence there every other weekend and this translates into a few hundred bucks a month. Not so shabby.

2. Rent your car.

If you have a car and don’t use it much, consider listing it on Turo. According to Turo, if your car is worth $20,000 and you rent it out via the platform 15 days a month, you could earn $6,501 a year.

3. Hang out with four-legged friends.

If you’ve considered starting a dog walking business but you don’t have the time to market yourself, Rover and Dogvacay might offer the perfect solutions. These two apps allow you to list your hours of availability, set your rates and voila! – you’re in business. If you live in a dog-friendly house or apartment, you can even host dogs when their owners are on vacation and start your own hotel for dogs.

4. You’re in the driver’s seat.

Yup, driving for ridesharing services is an easy way to make some extra cash. Some good options: Uber, Lyft or Safr, which recently launched in Boston. Redefining ridesharing for women, Safr aims to provide safe transportation and job opportunities for women. According to the Safr website, it also pays more than other driving apps. If you don’t want to drive people around, what about food? More than 100,000 people are already signed up on Postmates to deliver – among other things – take-out meals from local restaurants to hungry patrons. According to Postmates, drivers can earn more than $25 an hour and set their own schedules.

5. Turn your skills and talents into fast cash.

If you enjoy doing household tasks and consider yourself a jack of all trades, you might consider signing on to TaskRabbit to offer house cleaning, furniture assembly, handyman or other services. You set your rates and choose to work hours that fit your schedule. As another option: If you do a bit of research, you might find a specialty app that will help you score side gigs. For example, I teach yoga and recently signed up for a new app called EasyPose. I entered in the types of yoga I teach and my availability. Students use the app to hire instructors who will come to their homes to teach private yoga sessions. Within a day, I had my first client.

As you can see, if you want to earn extra money to jumpstart your savings, you’ve got plenty of options. Yet, regardless of what type of gig works best for you, it’s important to keep your eye on your savings goals. To do this, it’s a good idea to stash away all of your earnings from your new side hustle into a savings account. Think of it this way: If you were able to get by on your full-time income before, anything extra is gravy.

If you find it hard to resist the temptation to spend your newfound income, here’s another tip: Automate your savings. Automating makes it easy for you to save without thinking about it. For example, with a Chime account, you’ll save money every time you use your Chime Visa Debit card to make a purchase. That’s right. When you use your card, your transaction will be rounded up to the nearest dollar and that rounded up amount will be transferred into your savings account. If you use your debit card twice a day on average, you’ll save about $400 a year.

Between automating and earning more money with a new side gig, your savings goals are now within reach. Are you ready to start manifesting more money today?

 

Introducing Automatic Savings, a New Way to Bank With Chime That Pays You to Save

We started Chime with a simple mission: to help our members save money, form healthy financial habits and get ahead without a lot of hard work. Today, we’re pleased to announce a major milestone in accomplishing that mission by introducing an interesting-bearing Savings Account that helps members save simply by using their Chime Visa® Debit Card. We call it Automatic Savings and helps you build your savings without thinking about it.

Sounds too good to be true? To get started, simply open a Chime Spending Account and Savings Account online or through the mobile app. Once approved for a Savings Account, turn on Automatic Savings. Here’s how it works:

  • Use your Chime card to pay bills and make everyday purchases.
  • We’ll round up each purchase you make to the nearest dollar and transfer the round-up from your Spending Account to your Savings Account.

We’re excited to offer this new way for our members to take small steps toward a regular savings habit. As we found in our recent Millennial Money Mindset Report, 93% of young adults believe setting aside money for savings is important, yet 40% aren’t doing it. As a Chime member with a Savings Account and Automatic Savings, you can put your savings on autopilot, get rewarded when you spend and get rewarded when you save.

Today we’re also announcing a number of new additions to your Chime Spending Account:

  • Pay bills with direct debit.
    Pay your rent, mortgage, credit card or student loan payments electronically by providing your Chime Account and bank routing and account numbers to your biller.
  • Cash-back category-wide rewards.
    Groceries. Restaurants. Utilities. We’re introducing new category-wide rewards that give you instant cash back when you use your Chime card at any retailer in a given category.
  • No Monthly fees and fee-free ATMs.
    We’ve eliminated the Account Maintenance Fee for dormant accounts, and ATM transactions are now fee-free for all members at over 24,000 MoneyPass® locations.

We’re excited to offer our members even more rewarding ways to bank with Chime, and there’s much more to come. We look forward to hearing your feedback, and if you’re not already a member, you can sign up here.  

Chris Britt, Chime Founder & CEO