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For Your Life September 18, 2020

Rebuild Your Pre-Pandemic Emergency Fund Quickly With These Tips

By April 10th of this year, a third of Americans had blown through their emergency funds, according to a survey conducted by Nerdwallet.  Millennials are leading the way, with 45 percent of that generation saying their personal backup rescue funds were now depleted. 

The global health crisis has shaken large and small economies from goliath governments to close-knit communities and individuals. 

But something new is happening. People are taking charge and learning to rebuild their reserves. Here’s how.

Cut Costs and Enlarge Earnings

Cutting costs sounds simple in theory but can be difficult in practice. When your emergency fund has been used for its intended purpose, the best way to rebuild it is to simultaneously cut your spending and increase your income. 

However, traditional budget cuts may not be wise, since the future is more uncertain than it’s ever been. You need pandemic-specific ideas. These creative concepts can get you started. 

  • Learn household skills you once outsourced. Many people are learning how to cut kids’ hair, bake bread, clean the house, apply cosmetic treatments, grow vegetables, groom pets, maintain landscaping flower beds, create/send digital birthday gifts, and sew their own face masks. Choose a few DIY projects (things you would have had to spend money on), do them, and transfer that cost to your empty emergency fund.

  • Cancel products and services you used to need. If you’re only using one vehicle now, cancel the insurance and surrender its plates to save money. Ask for a prorated refund from your gym, and pause your in-car satellite radio.

  • Ease off the at-home show binging. A streaming service is a luxury. Do you really need more than one? Choose your favorite, and ask your friends for recommendations that are limited to that one platform.

  • Go back to making minimum payments on debt. Usually, it’s good to snowball extra money into payments to get out from under the loan more quickly. These days, though, the emergency fund takes priority.

  • Ask for grace. Your utilities company, landlord and bank may be willing to negotiate with you on the timing and amount of payments until you can rebuild your emergency fund. It’s better to defer payments to stow away a cushion than to keep up with all your bills and try to navigate the uncertainty without a little safety net.

  • Consider refinancing. Interest rates are low right now, and you may be able to lower your monthly payment if you contact your bank.

Cutting back expenditures will help, but you can supercharge your rebuilding process by increasing your income while you save money. 

  • Start a business that supports people attempting to do the above cost-cutting activities. Create a streaming video channel that teaches others how to cut kids’ hair or grow vegetables, for example. Turn it into subscription- or ad-based premium content to generate more money.

  • Help locals move. Many people are leaving the city for suburban or rural remote work. Offer them a hand on gig sites like TaskRabbit.

  • Tutor kids whose parents are juggling work and newly-remote academics. Many parents simply can’t help their youngsters with remote learning. Can you? There’s even a market for simple online babysitting. Depending on your storytelling and peek-a-boo skills, you may find a lucrative niche.

  • Offer your administrative, design, translating or writing services to companies that have seen a surge in business because of the pandemic. Some industries are thriving while others have collapsed. Seek out brands in the former category and approach them to offer help.

  • Sell your unused items online. Clothes, furniture, toys, and electronics that once served you well may now be collecting dust. Meanwhile, someone could be searching for them. Online marketplaces make it easy to post, sell, and ship your stuff for mutual satisfaction.

  • Stash any government help. If you don’t need your relief money for housing or groceries, consider putting it straight toward future emergencies.

If you’ll notice, the above earnings-enhancers are ventures that require little to no startup investment. Now is not the time to buy an expensive homebrewing beer kit to craft ale to sell, for example, unless you were both a Certified Brewmaster Scientist and an expert in business licensing pre-pandemic. 

Throughout everything, maintain an open line of communication with your local bank. If you don't have a savings account, there's no better time than now to open one. Subscribe to the We Have Ideas hub for more ways to navigate our collective "next normal". 

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