I remember not having a $1,000 emergency fund to my name. Those were not fun times, especially as a person with a family.
However, over the years, I started to get my act together. I began to budget my money and consume less; now, I have $300,000 in liquid assets.
Start with $1,000 first. The most critical number to reach is your first $1,000. This mindset comes from Dave Ramsey, the finance guru.
Your first $1,000 emergency fund prevents you from tapping into credit cards while on your debt pay-off journey.
Most Americans cannot come up with $1,000 in an emergency, so the goal is to change your financial situation in 30 days.
Getting started with your emergency fund. Before you start your 30-day emergency fund challenge, ensure you have the correct budgets.
That's right; your household probably needs multiple budgets. For example, just because you assign $500 per month for food, you'll probably need to break it down further to stay on track.
I have my ($4,000) bills and saving budget and my ($1,500) food, gas, and entertainment budget. What you measure, you manage. If you take your budgets seriously, you'll see financial success much sooner.
The purpose of the 30-day challenge. The goal of the 30-day is to get $1,000 into your emergency fund quickly.
You will want to separate your emergency fund from your everyday checking account. I recommend opening a checking and high-yield savings account with Discover.
Once you have your $1,000, the next step is to pay down debt using the snowball or avalanche method.
But today, our focus is on the 30-day challenge. Ensure everyone in the family understands the goal and is on board. When you live below your means, it is easier when everyone is on the same page.
Week #1: Reducing your dining out expenses. After you create your budget, you'll see that you probably eat out more than you should.
In fact, you can probably pocket $300 to $400 towards your emergency by not eating fast food, drinking Starbucks, and going to restaurants.
Do you know how to cook? If not, this is an excellent time to learn about Top Raman noodles, Hamburger Helpers, and Velveeta Mac & Cheese.
You can do some exciting things with boxed food. You can also grab some healthy fruits and veggies. I like to grab some Walmart-brand frozen pizza as well.
Whatever your food budget, you can easily reduce it by 50% for the month. We waste so much food in America that it has become a habit. This is a good month to watch for wasted and spoiled food.
Week #2 Cheap entertainment for you. I firmly believe in having fun on a budget instead of families picking an activity, then formulating their budget.
For example, we may want to go to the San Diego Zoo. After deciding where to go, we say they need $500 for the day.
But, we should conduct planning the exact opposite way. We should look at our budget, say $100, and find activities that fit our available spending.
With your budget in hand, you should reduce your entertainment budget to 70% of your regular spending. You can buy a movie online or play board games at home.
Week #3 Selling underused stuff. We all have underused things; it's time to sell some of these things.
Not only is it good for the wallet, but it's good for the soul. A cluttered lifestyle can cause anxiety; we need a clean, clear space to form good thoughts and feelings.
Now is an excellent time to rethink our living space and remove old and underused electronics, cell phones, clothes, and kitchen items.
You should be able to make $500 from this task alone easily. Even better, you can begin to detox your environment and defeat rampant consumerism.
Week #4 The art of bartering and trading. Do you have a skillset or unique talent? If not, are you strong, or can you walk a dog?
This week is a great time to put your entrepreneurial talents to the test. Ask someone to walk their dog for $10 or help them move for $30.
Keep your ears to the ground, listen for a chance to barter, and trade your skills for cash. You can also have a bake sale or let your friend borrow your car for a day.
Ultimately, you have to share and help others to increase your income AND happiness. When we try to do things alone, the world consumes us (and our time).
The final details. How did you do on your 30-day challenge? Your budget is the most crucial aspect of saving money.
How would you cut 50% of your food budget if you didn't know your food number? Again, most people do not follow a strict budget.
I have 4-6 spreadsheets I review almost every day. Becoming rich isn't about being cheap and protecting your money.
It is about understanding money is about time and value. The more time and effort you give to others, the richer you become.
Conclusion. It's tough to save $1,000 with a scarcity mindset. When you believe (truly believe) that there is enough money for everyone, you see a positive reflection in your accounts.
As you start the 30-day emergency fund challenge, understand that this is the beginning of a powerful movement inside you and your household.
You will save $1,000, pay off your debt, and save and invest for the future. Once you believe (and budget), great things will come your way.
I have been where you are now. Changing my mindset was the only way I could find financial success.
You may even want to find an accountability partner or family if you think you will struggle. Life is so much better when we give and share with others. Good Luck!
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