In light of the Coronavirus (COVID-19) outbreak, millions of people lost their jobs while businesses struggle to stay afloat amid closures.
If you don't have an emergency fund yet, now is the best time to start saving. Even when we are already in an emergency, it is still possible to do so.
Generally speaking, you should have an emergency fund with enough money to cover three to six months of living expenses of your household. You’ll determine this number from looking at your budget and calculating how much you need each month to cover essential expenses. Rent or mortgage, food and transportation are some of these necessary spending categories.
For our family of three living in San Diego, California, our goal for our emergency fund is $30,000. We are nowhere close to that amount so now we are making every effort to boost our cash reserves while we still have an income coming in each month.
It’s hard to save a lot of money quickly on a modest income, most of us live pay check to pay check. So making a plan is a wise decision, always have a back-up plan up to plan D just in case plans A to C did not work.
Here are a few things that our family is doing that may also help you bump up your savings.
1. Save your tax refund
At this time of the year, is when we usually receive our tax refund. This is an easy way to increase your emergency fund quickly. Our plan was to save most of it and pay all of our debt in our credit card. Because of the tax refund, we are able to save more than half of our emergency fund goal. So we still have the remaining half of our goal to focus on.
2. Pick up extra shifts
My husband and I work in the healthcare system so we can always pick up extra shifts to help bump up our emergency savings.
3. Online side hustle
With our current situation with the Coronavirus outbreak, it is best to choose a side hustle that can be done remotely or at your own home like online tutoring.
4. Save your miscellaneous money
This money is usually for entertainment, eating out at restaurants, seeing concerts and for parties. Nowadays, we are advised by the government to stay at home and practice social distancing. So we are able to save all this miscellaneous money and add it to our emergency fund.
5. Cancel memberships and subscriptions
Review your bank and credit card statements, you're likely to find at least one or two memberships and subscriptions you regularly spend money on that you can do without like your gym membership. You can always exercise at home especially now that gyms are closed. Cutting back on those things is a good way to bump up your savings before things get worse.
6. If you receive cash as a gift-save all of it
On your birthday, when your friends ask you what you want to receive as a gift, don't be embarrassed to tell them you are more than happy to receive cash as a gift instead of some other material things that you will not be using. Share to your friends that you are trying to save for your emergency fund so even as little as $1-$5 helps.
Remember, in an emergency, we don’t fund vacations, fancy new clothes, dining out or other luxuries. Each extra dollar saved counts no matter how small it is, even as little as $50 saved can be used to pay your phone bill for a month.