Your Guide to Building aSix-Month Emergency Fund

A six-month emergency fund is the savings you need when you've lost your source of income or need to make payments without them affecting your living expenses. As of March 2022, only 33% of Americans had their temporary nest eggs sorted out. You might need one to make payments for a medical bill, a new car, or a collector's item.

Here's how Francisco Faraco recommends buildings your fund before the rainy days strike.

Recalibrate Your Budget

Massive nest eggs start small, or as it is in this case, with small deductions to your daily budget. You don't have to settle for subpar to adopt a lower budget, but you can divide it into:

·Essentials (food, housing, commute, and insurance).

·Non-essentials (entertainment, non-work-related transport, and clothing).

·Savings

Once you've identified the above, you can re-allocate some of the non-essential expenses to your savings account, also known as your emergency fund.

Save Your Change

Have you ever maintained a swear jar at your house? The money in that jar is probably donated to a charity, but the idea isn't half-bad when you're planning to save money.

Except for when you intend to tip the other person, you might want to put all the change you end up with in a mason jar until it's full. When you run out of jar space, you can deposit all of it into your savings account and start the whole cycle over.

Cut Your Expenses

Just because you've reduced your non-essential expenses doesn't mean you should overlook your essential payments completely. There are several areas of improvement in your daily expenses, such as:

·Utilities: You can save electricity or water by taking the cord out of the socket when not charging your phone or using a dishwasher instead of doing the dishes by hand.

·Household Expenses: You could sublet your apartment or give up paid parking to lower your living costs.

· Food: Eat homecooked meals at home or work.

·Grocery: Make a list beforehand, and don't veer off course.

·Card Payments: Cancel your credit card and lower the daily limit on your debit card to reduce daily expenses.

Reach Out to Francisco Faraco to Save Like a Pro

The above tactics may or may not help you with your six-month emergency fund, but

FINRA Francisco Faraco sure can. With the CFA-designated expert's help, you can build your financial cushion.

Consult the University of Chicago teaching assistant for tips, tricks, and strategies to help you make small and large deposits into your savings account.

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