Tools to Build an Emergency Fund

Submitted by: Jean Keener with Keener Financial - 817-993-0401

So, you know you need an emergency fund. You've been trying to build one, but just can't seem to get there. The percentage of people living paycheck to paycheck ranges depending on who's surveying from 47% (Careerbuilder 2008 survey) to 71% (American Payroll Association 2008 survey). This issue isn't unique to any particular income level - the Careerbuilder survey also shows 21% of Americans with $100K+ incomes living paycheck to paycheck. Whatever the actual percentage is, if you're one of the people in the paycheck-to-paycheck boat, you know how challenging it can feel to change the situation.

If you're determined to make this change, you have to do more than nickel and dime your emergency fund. More than the popular "save the change" program on your credit card (nothing wrong with this, it's just not enough). The small things do add up, but it's very slow and doesn't really give you that sense of accomplishment most of us need to continue.

First, set a goal.

Ideally, you'd have 6 months' of living expenses in an emergency fund. But for a true paycheck-to-paychecker, thinking about the ideal makes you laugh. So start with $1,000. Then when you get that, you can change your goal to one month's expenses. Then three, etc.

Second, set a timetable.

Don't give yourself a lot of time to save $1,000. You want a sense of urgency to achieve your first milestone. I'm not going to get specific here because depending on your income level, it might be reasonable to do it in one month or three months. But I wouldn't suggest more than six months for anyone.

Third, pick 3 things from the list at www.KeenerFinancial.com that you can do today.

Fourth, write it down and show it to someone.

I will save $_______ by ______ (this date) by doing items 1)______________, 2)__________, and 3)____________. Your chances of success increase exponentially when you write your goals down and share them.

Good luck!