Stress Less with an Emergency Savings Fund

If you don’t know, now you know. You need an emergency savings fund. What’s that, you might ask? According to Investopedia, an emergency savings fund is “a financial safety net for future mishaps and/or unexpected expenses.” It’s an account you can easily fund, access, and take money out of in case of emergencies. I want to drive home the fact that you need an emergency fund, not only because it’s good to “save for a rainy day,” but because it will give you so much ease and less stress financially. I’ve had an emergency fund for a while, and I feel better about my financial situation because of it. So let’s dive into the why, how, and some common questions you might have about it. Plus, as always, resources!

Why do I need an emergency savings fund?

Given the current state of affairs, I think everyone understands now that life can be unpredictable. Sometimes our lives are shaken up a bit by something like your car breaking down. Sometimes, though, more significant issues rattle us like – ahem – a national emergency that disrupts our economy. In both situations, we are affected by something outside of our control. That can feel scary, debilitating, inconvenient, and frustrating. However, when we set up a fund for these moments, we can cushion our fall.

When your car breaks down, getting it fixed feels a lot less stressful when you have a spare $1,000 to $2,000 lying around. Suddenly losing a job or a stream of income like many people did last year demands that you have a backup plan. Having an emergency fund with enough to sustain you for a few months helps you stay on top of your bills and holds you over until you have a stable income stream again. In short, having an emergency savings fund gives you peace of mind in knowing that if something goes south, you’ll have the money to help you rebuild. And funding your emergency savings doesn’t have to be stressful or complicated at all! See below for more info on this.

Can’t I just use a credit card if I ever get in a bind?

You can, but I wouldn’t recommend it for two important reasons. For one, borrowing large sums of money on your credit card that you’re not able to pay off within a reasonable time is dangerous for your credit. That stress is the last thing you need when you’re navigating an emergency. Suppose you do decide to use your credit card for emergencies. In that case, I suggest still having an emergency savings fund so you can use that to pay off the balance of how much the emergency costs. If your car needs to be repaired ASAP for $1,000 and you use your credit card, paying that off is much easier when you already have an emergency fund.

Secondly, suppose you already have a lot of credit card debt or other debts that you’re paying down. In that case, it’s probably wise to steer clear of adding to your outstanding balance. So, in short, if you have to or prefer to, use your credit card to cover your emergencies but have an emergency savings fund to actually pay for emergencies. Because, remember, credit is borrowing money. You still have to pay it back.

What are the benefits to having an emergency savings fund?

I’m glad you asked! Here’s a list of a few benefits I personally have experienced from having an emergency savings fund:

  • An emergency savings fund gives you security in knowing that no matter what happens (personally or nationally), you have a cushion of cash to lean on and support you. Emergencies are stressful already – we don’t need extra financial stress on top of that.
  • If an emergency does come up that you need money for, you don’t have to dip into your regular savings or checking account to fund it. Your usual flow of income and purchases can go relatively untouched while the situation is financially taken care of. A plumbing issue, for example, shouldn’t be the end of the world for your wallet.
  • Having this fund is one of the foundations of financial independence! With this, you can take care of yourself and your needs without owing anyone anything (including credit card companies).

How should I start and/or fund it?

For starters, start your fund in a separate account away from your checking or regular savings, so it doesn’t get mixed up with the money you’re regularly using. You can set up this account with your current bank or another bank of your choosing. You can even set up one with an online bank – just make sure the money is easily accessible to you. Second, set up automatic deposits! This is something I recommended in one of my previous Money Monday posts. Setting up an automatic deposit between $10 to $50 a month is a small but great start that makes saving easier. Thirdly, set up a goal for yourself. Most people don’t have at least $1,000 available to them for emergencies. You can use that as your starting point, or calculate how much you would need in the event of an emergency and start saving towards that number. Lastly, make sure to use this fund for emergencies only!

Funding your emergency savings account will go hand in hand with your budget – how much do you have to save each month? Can you cut back on anything to help fund this? For example, I realized I wasn’t using my Audible subscription as much these days. I spend $14.95 per month on that subscription. Now, of course, cutting out that subscription is not going to give me a considerable surplus of money for my emergency savings fund. However, it does give me at least $179.40 per year to put towards this fund without doing anything different. Now I can automate saving $14.95 each month (the same price as the subscription I don’t use anymore) to my emergency savings account. Yay!

You can try this with categories you spend a lot in, like eating out, buying clothes, etc. The good news is that you don’t have to cut these things out of your life forever or even for the whole year. Try going a month without your subscription or takeout and put that money towards your fund instead. See how you feel, and see if you even need or want to have that spending habit anymore.

More resources for you to learn about emergency savings funds:

A Quick Guide to Your Emergency Fund – Dave Ramsey

Emergency Fund Calculator: How Much Will Protect You? – Nerdwallet

How Long It Really Took Me To Save Up An Emergency Fund – The Financial Diet

I hope you give your current and future self more ease and financial freedom by setting up an emergency savings fund this week. Catch you soon with another Money Monday post!

5 Women You Need to Follow in 2021 for Financial Advice

Last week I told you about how important it is to consume financial education often. One of the easiest ways to do this? Follow personal finance champs on social media and take workshops! This week I introduce you to five women I believe you should follow this year for finance tips, tricks, education, and realness. All these wonderful women make financial education accessible, understandable, and fun! Let’s dive in.

The Financial Diet (@thefinancialdiet)

Chelsea Fagan started The Financial Diet as a personal blog in 2014. Ever since it has grown into a cross-platform media company that provides quality money-related content to young women everywhere. The Financial Diet is a great place to get insight and advice about budgeting, money management, career and education, and your lifestyle. I enjoy being subscribed to their weekly newsletter and consuming the listicles on their site every Money Monday. Check out their Instagram, YouTube channel, and website as a great hub for all things finance.

Berna Anat (@heyberna)

Berna Anat is a hilarious Filipina “Financial Hype Woman.” Her website reads that she is “dedicated to making financial literacy more funny, more accessible, and more Brown for young people everywhere.” And she’s doing just that! I first found Berna on Instagram while looking for financial content creators that made things easy to understand. Her IG stories have helped me find helpful resources and consider important questions about my finances. Also, she does a lot of dancing, money memes, and workshops that give you all the insight, info, and laughs you could hope for. Check out her IG page as well as her website for more on Berna!

Amanda Holden (@dumpster.doggy)

Amanda Holden is your go-to person for investing. She worked in the investment industry for six years before coming into her own and seeing that she wanted to create space for women to talk about money and their lives. Although Amanda has more than just investing insight on her platforms, I have personally benefitted from how she breaks down investing in her workshops and her posts. Check her out on Instagram and check out her old blog, The Dumpster Dog Blog, for more.

Kara Perez (@webravelygo)

Kara Perez brings you feminist economics and inclusive personal finance. Her content tackles both systemic discrepancies and immediate, actionable steps for your personal finance journey. With lots of student loan debt, multiple jobs, and the realization that there’s a lack of representation for people like her in the financial world, Kara decided to create Bravely Go. I completed one of Kara’s workshops last year. It opened my mind to ideas like the importance of real estate, retirement, and the importance of accountability. Check out her IG page and website for more.

Yanely Espinal (@missbehelpful)

Yanely is a great person to go to for help with making informed money choices. Some of her specialties include credit, savings, and wealth building. She is real, Latina, and on the rise in so many ways. Her personal finance stories, e.g., her journey with tackling credit card debt after graduating, inform the content she creates for people in similar situations. I learned a lot about credit from Yanely, and I really enjoy her energy. You should also check out her podcast titled, “Mind Your Money with MissBeHelpful.” There she interviews great guests on their money journeys, dealing with topics like tackling debt, financial freedom, and changing their money beliefs. I am personally subscribed. Connect with her on IG and YouTube as well.

I hope you benefit from their content as much as I have! I’ll connect with you next week with another Money Monday post.

4 Simple, Starter Tips for Money Management

Over the past few years, I’ve started to take my financial health and future seriously. Along the way, I’ve come across a LOT of tips and methods about personal finance and money management. And honestly, at times, it was overwhelming. However, I kept an open mind and took note of what worked for me (and is still working for me to this day!). Here are just some of my favorite, simple starter tips for money management.

Make a date with your money.

Before a few years ago, I would check my bank account here and there. I wouldn’t really pay too much attention to what I was spending my money on or where it was going. I wasn’t a super-spender, and I did pretty well when it came to saving. Still, I was also a college student, which meant I spent a lot of money on things like food, transportation, events, etc. However, as my personal finance interest grew, I knew I needed a tangible and consistent way to manage my money.

When I was introduced to the topic of Money Parties by The Fiscal FemmeI started making “dates” with my money – I called these dates “Money Mondays.” Every Monday, I would sit down and look at my financial situation. Now yes, that can be daunting at first. So I tried to make it simple and as painless as possible. I told myself I would note how much I made, how much I spent, and what I spent my money on during the previous week. I used a spreadsheet to keep my numbers somewhere organized. You can find pre-made money tracker templates online if you’re going this route.

Then I decided to analyze my spending at the end of each session. I was able to see what categories I was spending the most amount of money on and how I could cut back realistically. The purpose of these money dates for me is to keep track of what’s been going on financially for me, see where I can save money, and make progress each week. I try to keep these sessions between one and one and a half hours max with breaks because addressing your financial situation can be tough sometimes. After about an hour and 15 minutes in, I’m ready to move on to something else.

If you want to have a healthier relationship with your finances, you have to set up some consistent money dates. It’s a keystone habit that will help you get better with your money. Like with any healthy relationship, you gotta have check-ins from time to time and see where you can grow. Plus, dates can be so fun! Pro tip: make a money playlist to hype you up before your weekly check-in. Some fan favorites include “Money” by Cardi B and “Billionaire” by Bruno Mars and Travie McCoy. Get a snack, dress up, or do whatever it is that will get you in the mood to manage your mulala.

Automate everything — payments and savings.

One of the easiest ways to take care of your financial obligations and goals is to automate. I have set up automatic payments for my credit cards and automatic deposits to my savings account. With making payments for things like credit cards, you can automate paying the full balance, the minimum payment, or a specific amount each month. Automatically paying at least the minimum payment amount each month is such a game-changer. It’s a great way to chip away at any debt you have, increase your credit score, and keep yourself accountable without having to do much work. Check out your credit provider’s website or call to see what your options are.

When it comes to saving, this is often the last thing we do when we get paid. You might’ve heard of the term “pay yourself first,” which relates to putting away some money in your savings before you go to pay bills or spend at your discretion. There are different opinions about how much you should be saving. Still, every personal finance educator I’ve come across agrees that you should be saving – period!

Even if you save just $10 per month, by the end of the year, you would have $120, which could help you if you’re in a bind. So make sure you’re making automatic, regular deposits to your savings account each month. Check-in with your bank to see what your options are. I use the high-yield savings accounts from Ally Bank, and setting up recurring deposits is super easy. Find what works for you!

**SUPER IMPORTANT SAVINGS REMINDER: You have goals that are short term and long term. You want to save for retirement, or for a new home, or for a trip to Scotland maybe. But the first thing you should save for, first and foremost, is for emergencies. I’m gonna put this in bold letters… HAVE AN EMERGENCY SAVINGS ACCOUNT AND FUND IT REGULARLY. And separate this account from your regular checking and savings accounts, so you don’t accidentally – or intentionally – spend it on anything other than emergencies. This will save you a lot of headaches if an emergency actually does come up.

When you’re about to make a big purchase or one you’re unsure about, consider a few things…

So you’re feeling the itch to impulse buy? Or maybe you just REALLY WANT to press “add to cart” on that thing you saw online because it looks so useful/beautiful/cool. Or perhaps you just need a new fridge. I hear you. Before you swipe and checkout, though, ask yourself the following:

  • Do I actually need or want this thing? What’s my honest motivation for buying it?
  • Is there an alternative to this that might serve me in a similar (or better) way? For example, instead of getting Beats headphones, would I be just fine – if not happier with – headphones from a different brand?
  • Is this the best price I can get this for? Consider doing a little research or looking at sites that offer coupons for a variety of stores online, like Honey.

Consume financial education often.

When I surrounded myself with certain people, books, and podcasts, I started to understand what concepts like “investing” and “retirement plans” actually were. I didn’t understand before how things like credit and debt really worked. I was also just starting out in college, so I didn’t know much of anything, to begin with. But that’s beside the point! You can’t know what you don’t know. So if you don’t know much about budgeting, saving, investing, or paying off debt, listen up.

First, I highly suggest you subscribe here because I don’t hold back when sharing resources with you all (if you couldn’t tell already). Second, start doing some research based on your financial goals and interests. For example, if you don’t know how to budget or where to begin, you could check out The Budgetnista. You’ve probably seen her all over Instagram. Pick up some amazing books like Rich Dad Poor Dad by Robert Kiyosaki and Sharon L. Lechter. Consider subscribing to podcasts like The College Investor or tuning into The Financial Diet on their YouTube page and blog.

The point is, the best way to move forward with your financial journey is to learn and take actions that will serve you and your goals. I wish we all had a personal finance class in high school. That would have made adulting a little easier, for sure. But no matter what age you are, it is truly never too late to add some financial education into your routine. And it doesn’t have to be boring either, but more on that later.

Keep a lookout for the next couple of Money Monday posts, where I share with you some more resources I’ve used to learn about money and money management.

Most of these tips just require some commitment, a little bit of research, and a little bit of introspection about what you need right now. Try out at least one of these tips this week and see how it feels. Taking any step towards having a healthier relationship with your money is something to celebrate. I’m proud of you, I’m rooting for you, and I’m excited for you! I’ll check in with you next week.

Money Monday: The Series

Around two years ago, I started to learn about personal finance and money management. Someone I love introduced me to some of the core concepts of managing money. After that moment, I kept finding and attracting more opportunities to learn about (and practice!) having a healthy relationship with my money.

At one point in my journey, I found myself overwhelmed by… well… everything in life. It just felt like there was so much I wanted to focus on, keep track of, or prioritize in some way. So I broke it down and made a system. I decided to dedicate a theme, a focus, to each day of the week, Monday through Sunday. I basically made hashtags for myself (#moneymonday). With that theme in mind for the designated day, I prioritize and focus my energy on some of the good habits I wanted to cultivate. That’s where Money Mondays started.

So I thought, “Great! On Mondays, I’m gonna learn about money!” But I soon realized I needed to make my Money Mondays a little more strategic, a little more… tangible and actionable. Here’s what a typical Money Monday looks like for me:

  • I review all of my financial accounts (checking account, savings account, sinking funds, credit card accounts, investments, all that jazz). I get a clear picture of how much money I have and how much I spent this past week. And it might be the Virgo in me, but yes, I have a spreadsheet to keep track of all this.
  • I look at last week’s purchases and ask myself about how those purchases served me. I try not to judge myself if I had a few frivolous buys in the week. I just take note of what drove me to make that purchase, the “why” or feelings behind it, and think about how I can better serve that drive in the future. For example, if I order Uber Eats instead of cooking it might be out of convenience or because I wanted to try something different for dinner. And that’s okay sometimes. But to not make it a habit, I could look for ways to make dinner more convenient and easy for me regularly (like batch-cooking!).
  • Lastly, I consume some form of financial education. I follow personal finance experts, read books, and/or listen to podcasts related to my money goals and interests.

This system helps me prioritize good habits all throughout the week, but at the very least, it ensures that I spend at least one day each week enhancing my financial future. Money Mondays remind me that I can have an abundant life, be resourceful, and learn a lot from my relationship with money.

Having said that, every Monday, I would like to help YOU on your financial journey, one step at a time. In a series I’m calling, you guessed it, Money Mondays! On Money Mondays, I will share with you my tried and true personal finance tips, as well as more resources, to help you learn how to make the most out of your mula.

Each week you’ll receive a post from me talking about things like steps to building an emergency savings fund, changing your beliefs about money, how to automate your finances, etc. This is based on my own experience and research. Yes, you will hear terms like “budgeting,” “Roth IRA,” “investing,” and all that jazz. But at the core of this, I want to share tools and experiences that might help you even if it just prompts you to do something small like saving $5 a month. I might even throw some questions at you for self-reflection… like right now!

TLDR; Money Mondays = a habit I’ve built of checking in with my finances and consuming financial education each week, AND the name of my latest series on here! Come back each week for money related articles every Monday.

Questions for reflection:

  1. What’s my current relationship with money? (e.g., “The thought of money makes me tense up,” “I’m scared to look at my bank account,” “I can’t seem to keep the money that I make,” etc.) No judgment necessary here, just an honest assessment of where you are right now!
  2. What are some of the beliefs I currently have about money and money management? (e.g., “Money is the root of all evil,” “Budgeting is restricting,” etc.)
  3. What is your relationship with saving? (e.g., “All I do is save,” “I’ve never saved before,” etc.)
  4. What is your relationship with investing? (e.g., seasoned investor, don’t know about investing, etc.)
  5. What are some purchases you’ve made in your life that you felt really good about? Why?

Give yourself time with these questions and prompts. See you next week with another Money Monday post!