Building your Emergency stash should be your top money goal because it provides a stable foundation for your finances, and that comes with peace of mind. Having an emergency stash means having money when you need it, quickly.
Here’s how to build your emergency stash in 7 steps (or quickly):
1. Set up a direct transfer
Make the setup like a monthly bill you have to pay. Arrange to have a set amount transferred from your day to day account to a special savings account each pay day day. You can even get your employer to make a separate payment direct from your pay. In most cases all you need to do is ask.
2. Use lump sums
If you get a bonus at work, win some money or get a tax refund, transfer 90% of it to your savings account - straight away. The remaining 10% is your reward to spend how you like.
3. Stop spending Gold Coins
When you get home each day, round up any gold coins you have on you and drop them into a savings jar. You might be surprised at how quickly your coins add up to big bucks. At the end of each month, deposit them in your savings account. If you’re feeling adventurous, save ALL your coins. For advanced players, save your fivers too.
4. Sell Stuff
That stuff you no longer use.. try to sell it on eBay or Gumtree. Have some fun with friends and throw a joint garage sale. If you’re not using that stuff, the dollars are better in your pocket.
5. Earn extra Income
Check out some crowdsourcing platforms (like Airtasker or Freelancer) for odd jobs that you could do for extra cash.
6. Use CashBack Rewards
Does your credit card have a rewards program that gives you CashBack? Apply these payments to build your Emergency Stash. What about loyalty cards that give you every 10th coffee free?
Put aside the money you save each time you redeem your loyalty bonus coffee.
7. Go nuts cutting unnecessary costs
It’s amazing what you can cut out if it’s only for a short period while you get your Emergency Stash to the first $1 000. It’s a bit like a crash diet; short periods only. A budget built on restriction isn’t sustainable as it will most likely lead to blow outs and failure. But as a quick sprint to your first $1 000 - it’s worth a go.
When you get your Emergency Stash hits $1 000, shift your focus to getting rid of your debts. When you’re done there, circle back to your Emergency Stash and get it up to the level that’s right for you.
With over 25 years in Financial Services from consulting to management, Vince Scully is the go-to guy for wealth management and financial advice. Before creating LifeSherpa, Vince founded the Calliva Group; a fund manager, product issuer, adviser and lender. Vince is an adviser to the Wealth Management Industry, and prior to his role as CEO at Calliva, a senior member of Macquarie Bank’s infrastructure team.