Build an Emergency Fund with Supplemental Income

You probably know that you need an emergency fund. After all, living paycheck to paycheck, without an emergency fund, can result in a financial catastrophe at the first sign of trouble. Whether you end up with surprise medical bills, or whether your hours get cut at work, when you are living at the financial edge, the smallest thing can send you over – not to mention what happens with the big things.

The difficulty with an emergency fund, though, is setting aside enough money to meet your needs. Experts recommend that you have at enough money to cover least six months’ worth of expenses in your emergency fund. There are even some who believe that it’s better to have nine to 12 months’ worth of expenses saved up. If you spend $3,500 a month on bills, groceries and other necessities, that means that you need $21,000 saved up in an emergency fund that should last you six months. That’s a daunting task.

When you have a smaller income, it becomes especially difficult to save up the money you need for an effective emergency fund. The important thing, of course, is to start saving now. Evaluate your budget, and see where you can cut back. Begin setting aside money in a high yield savings account – even if it is only a few dollars a week. Having some money in your emergency fund is better than having no money at all.

Boost Your Emergency Fund with Supplement Income

Of course, you don’t have to rely on cutting items from your budget to build up your emergency fund; supplemental income can do the job for you. If your goal is to save up $21,000 in a year, you will need to find $1,750 a month to put into your emergency fund. First, decide what you can cut back on. If you can find $250 in your budget, you will need to figure out how to make the rest of the $1,500 you need.

Supplemental income can come in a variety of forms. You can start a side business online, working in the evenings to sell products and services that others need over the Internet. Popular side businesses can also be done in your spare time. Yard work, house cleaning, small home repairs (if you have the skills) and other odd jobs can provide a source of income. You can also look for a part-time job to do in addition to your regular job. If you don’t like it, you can always quit once your emergency fund goal is met.

Income portfolios, web sites and other income streams are also possibilities. They may take a little more time to build up, but they can provide you with the supplemental income you need to build a good emergency fund that will be there for you. It’s a dangerous world to live in without a little income diversity, and without a plan to provide for your family if something happens. Do what it takes to build your emergency fund, and you will enjoy financial peace of mind.