What is an emergency fund?

An emergency fund is exactly what it sounds like: it is money set aside for any larger expenses that come up unexpectedly throughout the year. This could be something such as losing your job, having to make major repairs on your car unexpectedly, or having to replace your roof after a crazy storm. In these instances, it’s totally appropriate to dip into your emergency fund so that you’re not putting that expense on a credit card or loan.

Why you need an emergency fund

Life is so unpredictable, and emergencies will come up where you have to spend a chunk of change that you weren’t expecting. As we all saw in 2020, a ton of people lost their jobs or jobs went on hiring freezes. People were having emergencies left and right, which is why it is so important to have an emergency fund.

Another big reason why it’s a good idea to have an emergency fund is that if you’re already in debt (I’m talking about those student loans, mortgages, or brand new car you bought after graduation), it is very easy to stay in debt. What I mean by this is that if an emergency comes up, it can cause you to skip a debt payment one month. Then next month, another emergency comes up and it can snowball from there. The amazing thing about an emergency fund is that it acts a buffer to keep you on track with your financial goals.

How much should you have in your emergency fund savings?

Most people are going to say you should save 3-6 months of expenses, but I’m going to say that it really depends on the type of job you have (+/- what job your partner has), any side hustles you have, and your current financial situation. If you’re just getting started or maybe you don’t have a lot of extra money to save, then start out with $1,000. It’s a small enough goal that once you hit it, you’re going to feel so good about yourself that you’re going to want to keep going.

After you hit the $1,000 emergency fund amount, then you can shoot for more lofty goals such as having 3 months’ worth of expenses or even a year’s worth of expenses.  Another great tip that I’ve learned is that if you have a stable employment (you know one that isn’t affected by pandemics or recessions), then you should shoot for 3-6 months of expenses for your emergency fund. What I mean by stable employment is any job that we saw were still in high demand when COVID hit, such as any healthcare job, government jobs, and any job essential for everyday living.

Now if you’re kinda in that camp but there’s a good chance that your job could be scaled back, outsourced, or computerized, then you should shoot for 6-9 months of expenses in your emergency fund. For those that have jobs that are seasonal or considered unstable employment, you’re going to want to save up at least 9 months if not longer for your emergency fund. This would include anyone that waits tables, is self-employed, and the like.

The best way to figure out what your 3,6, or 12 months’ worth of expenses looks like for you. You’ll want to take a look and see what your monthly expenses are. Then times that by the number of months you want to save. You can also look at your annual spending if you have that readily available to figure out this number.

If you’re not really sure how much you should save, I say go big or go home. Shoot for the stars and shot for a goal that scares you. Maybe that’s 10k or 20k or even more!

Where should you put your emergency fund?

Your emergency fund savings should be put in a separate account away from your account where you pull for your regular, daily expenses. Keep it separated from your savings/checking account. This way you’re less likely to spend it on something non-emergency related when it’s not in your view 24/7.

If you’re trying to figure out where to park your emergency fund, then I would recommend putting the money in a high-yield savings account that has a digital bank for easy access. You won’t get rich off the interest, but if the money has to sit somewhere, it can least make you a few dollars in the process.

Tips on building up your emergency fund savings

Now that you know what an emergency fund is and how much you should save for your current financial situation, now it’s time to actually make a savings plan. I promise that saving up for an emergency fund is not as daunting as it seems. It’s actually quite easy once you get started. You can even make it into a game if you have a friend or partner who is also interested in building up their emergency fund.

1. Set a monthly savings goal that is realistic for your budget

No amount is too small to add to your emergency fund savings. Whatever amount you feel comfortable saving from your paycheck, go ahead and automatic your savings into your emergency fund. This way you don’t even have to think about saving. If you need help with this, I highly recommend downloading the app called Qapital. It’s a finance app that helps you save money without you even realizing it. I used this a ton when I was in college and even had $2,000 saved at one point just by using the app.

2. Got a little extra money? Add that in too

I know you got that little stimmy check (it’s a joke from Twitter) at the beginning of the year. If you don’t need the extra money to pay off any necessary bills or expenses right now, then add it to your emergency fund for later. Same goes for your tax refund check, any money you got for the holidays, or etc.

3. Cut out ONE unnecessary expense

I’m not saying go crazy and cut out all unnecessary spending. But without going overboard, take something that you do regularly and cut it out for a certain time frame. Maybe you enjoy going to Starbucks in the morning before work three times a week. Or maybe you cut down your shopping budget for the month or cook more meals at home, instead of eating out. It’s honestly the small repeated expenses that can add up over the year that can really help boost your emergency fund.

4. Start a side hustle or sell your old clothes online

Highly recommend if you’re looking to make a little bit of extra money to put towards your emergency fund, then you should definitely start a side hustle. Some of the ways that I’ve made some extra cash over the years is by selling my old clothes on Poshmark, dogsiting and dogwalking on the Rover app, and through my blogging business. Titi has even made quite bit of cash by DoorDashing (or basically as a food delivery man). Do you have a skill or hobby that you could monetize this year to help you grow your funds?

5. Reward yourself with something small at the end of the challenge

Once you’ve hit your emergency fund goal, reward yourself with something small, but reasonable to celebrate your win. It takes some dedication and persistence to reach a financial goal. Be proud of yourself and celebrate your accomplishment! But don’t get lazy. Once you’ve hit the first goal, go ahead and start on the next one.

You may also like: How to Manage Your Credit After Graduation, The Hidden Secrets of Selling on Poshmark, and the Hidden Secrets of Dogsitting on Rover

The post Emergency Fund: Why You Need One + How to Save it Fast appeared first on Uniquely Mickie.

Textbooks

Textbooks are one of the biggest waste of money in college, at least in my opinion. For me, I don’t learn from just reading a textbook. I learn by actually listening and doing whatever I need to learn the material. So for me, I spent $600 on textbooks my freshmen year and I only used one of the books, that was required for lab. And that was only because the lab book was a workbook and I had to tear out pages to turn in for a grade. After that sorrow experience, I quickly learned that it is easier and cheaper to either rent textbooks or even better just go to the school library to rent for free. Yes, I said FREE. They have every textbook that is required for any classes offered on campus. It’s a great way to get the information that you need for class without spending any extra money.

Meal Plans

Only recently have I learned the freedom you have once you get out off the university’s meal plans. You can eat whatever you want whenever you want, instead of eating the same greasy food over and over again. With most meal plans, you have to use your meal swipe during a current time of the day and you have a limited amount of money to spend. Basically, it’s cheaper and healthier to buy your own groceries. If you are on a time crunch, you can do what I do, which is cook a big meal on Sundays that will last me four to five days or I use my crockpot during the week.

Coffee

While I am not a big coffee drinker, I love having a cup of hot chocolate on the go. But the problem is that if you spend $5 at Starbucks buying your favorite drink five times a week for a whole year, you are literally spending $1,300 on just coffee. That’s a lot of money that you could be spending elsewhere. For a broke college student, it’s totally worth spending the money to buy a basic coffee machine or a Keurig and k-cups to make your coffee at home. Plus you’ll also be saving the environment by using re-usable cups instead of throwing away paper cups.

Fraternities/ Sororities

Joining social groups and clubs are a great way to network in your community, meet lifelong friends, and have a social life in college. From keeping up with the fashion trends and being at every event hosted by your group, fraternities and sororities can take away a lot of cash and time. I don’t want to discourage you from joining one if it’s something you really are passionate about. By all means, go for it! But don’t just join because all of your friends are doing it or you want to be popular around campus.

Budget

I have to admit, I am still working on this aspect of saving money. But once you find a method that works, you can end up saving so much that you don’t even realize you’re doing it. I used to use Mint to set a budget. It’s an app on your phone that allows you to set a budget for each category, such as food and bills, and tracks where your money is being spent the most. I also enjoy using Qapital, which is another app, but it’s set up a little differently. You set your goals and rules that help you save money. The rules can be anything, such as save $5 if you want 5,000 steps in a day.

[bctt tweet=”Find a saving method that works for you and stick with it…” username=”uniquelymickie”]

Eating Out

This kind of goes along the lines of getting off the college meal plan, but it takes the idea in a different direction. If you love food and eating out, this might be the hardest item to cut back on. But if you can master the challenge, decreasing the number of times that you eat out once a week or by a certain dollar amount could save you a lot of money over time. I typically make myself only eat out once a week and it has to be less than $10. Another idea to cut back on dining out is to get a larger portion of your meal, cut it in half, and eat it later so you get more bang for your buck.

Coupons/ Discounts

If you know me in person, I love using coupons, discounts, and shopping at discount stores. Why pay full price when you don’t have to? That’s how I view shopping and you should to, if you want to save money without compromising on your favorite brands. For in-store shopping, I usually use the RetailMeNot app. Then for online shopping, I use Ebates.com, which is a website that gives you cash back for shopping online. Bonus! They even have their own coupon codes on the website for even more saving! I also love checking out Groupon for the awesome deals around my city, including events, parties, and concerts.

If you haven’t already signed up for Ebates,com, you can sign up through my referral code. It’ll give you $10, just for signing up and it’s totally free and easy to use! Click the link above if you want-which you know you do.

Cable TV

If you live in off-campus housing and cable isn’t included, I highly recommend forfeiting getting a cable package. It cost more money to have regular TV than to have a subscription to Hulu or Amazon Prime. Let’s be honest anyways, I’m always on Hulu when I have free time, plus I hate waiting for commercials to end. Plus if you get the app, you can watch TV anywhere, including class, but I’m not encouraging anybody to do this now. (:

[bctt tweet=”Save your coins by signing up to Netflix and Hulu for half the cost of cable TV” username=”uniquelymickie”]

Off-Campus Living

Living in a student apartment or renting a house with some friends will save you a lot of money in the long run. Student dorms are using price higher compared to off-campus housing due to the community and the distance to campus. If you live with more than one person, you can split all of your bills and cleaning duties. Enough said on this topic!

Scholarships

Moving along with the easiest way to save money, which is to keep applying for scholarships and anything that’ll earn you free money. Most college students stop or just for forget to keep applying for scholarships as they go through their college careers. Big mistake! The more scholarships money you can get, A) you don’t have to get as many student loans and B) if you have more than you need, the university will send you a refund check. That money can then be used for books, rent, or anything else that you need to excel in college.

Snacks

When I am doing an all-nighter in the library or have a long day of classes, I always carry an array of different snacks with me. This includes candy bars, cheez-it crackers, peanut butter cookies, or my favorite fruit snacks. Bringing your own snacks to class is going to help save you money because you won’t have to hit up the vending machine or pay for the overpriced snacks that every college campus offers.

Transportation

While everyone loves having their own car, cars can be quite expensive. When you think about gas, insurance, and parking passes, it really starts to add up. Now I’m not saying you shouldn’t have a car in college, I would just say to utilize other transportations as a first resort. You can look into carpooling with friends, taking your apartment shuttle bus, or using the university buses that run across campus. Either way, you won’t be stuck and you’ll be saving cash.

Bills

If you have any recurring bills, make sure you pay them all on time to avoid late fees and extra charges. Most companies will also allow you to set up automatic billing so that way you never have to remember nor will you ever forget to pay one. I also highly recommend decreasing any bills that you can. Some areas that you can decrease in are cell phone bills, credit card bills, gym memberships fees, and etc.

Spring Break Trips

So you see all of these pretty Instagram models on their spring breaks in Miami or somewhere tropical, and you want to be just like them! I feel you man, but those trips can get quite expensive for a short amount of time. Most businesses that are located in  those areas will spike up prices, which means you’ll spending more for the same quality of service. Instead of spending thousands of dollars on a week long trip, get a group of friends and head to a local beach or mountain getaway to spend some quality time together and making memories. That’s the main point of going on spring break. It’s to have fun with the people you enjoy without breaking the bank!

Grades

This one is an easy one to keep up with. Make sure to pass all of your classes so you don’t have to retake them and spend even more money on college courses. If you are struggling in a course, don’t be afraid to ask for help from your teacher, the tutoring center on campus, or a former student that has passed the course. Everyone on campus wants you to succeed, but you just have to ask for help.

If you made it this far, hooray for you for sticking with me! I know this post was kind of long, but I hope it was helpful and was able to teach you the different ways to save money in college. If you have any questions or comments, please don’t hesitate to leave a comment below or email me.  But before you leave, I want to know what are some of your favorite ways to save money in college? And what are your favorite snacks to bring to class? I’m a curious cat so let me know!

You may also like: How I Saved $2,000 in College, The Ultimate List of Discounts for College Students, and How to Build Credit as a College Student 

The post 15 Secrets on Saving Money in College appeared first on Uniquely Mickie.