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Create more savings without any additional dollars
A typical emergency fund will last three to six months long, which is a healthy number. To experience more financial freedom, though, a one-year or multi-year emergency is ideal.
There’s a hack that can help your emergency fund last longer without you having to save any money physically.
The Hack
Suppose you have an emergency fund that equals $24,000, and your monthly expenses equal $8,000.
To make your emergency fund last 4x longer, you need to slash your expenses four times by decreasing your monthly expenses from $8,000 to $2,000.
This may not be the easiest task because that means you will need to cut $6,000 out of your budget, but it’s doable.
Let’s say you want your emergency to fund to last more than four times, then you will need to slash your expenses by that amount, and if you need need to add funds, you won’t have to save as much compared to if you kept your expenses the same.
The Hack Times Three
Slash your expenses
Save additional money
Put your emergency fund into an investment fund that’s not too aggressive. Not only will your emergency grow larger without your effort, but you shouldn’t lose much money if it’s in a non-aggressive fund.
How To Decrease Your Expense Ratio
Focus on the big three ticket items: Housing, Transportation, Food
For most people, these three items are the largest in your budget, but they’re also our three most basic needs.
Once you decrease these three items, you will experience a less bloated budget and more room for savings and financial resources.
How can you decrease your housing costs?
Do Airbnb.
Move in with family.
Move in some roommates.
Sell the house and downsize.
Sell your stuff and downsize to a smaller apartment or townhome.
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How can you decrease your transportation costs?
Sell the car and get one that gets you from point A to B.
Get rid of the lease if you have one (plus leasing never allows you to own a car outright).
Wrapping It Up
One easy way to make your emergency fund last longer is by slashing your expenses.
The second easiest way to make your emergency fund last longer is by putting your entire emergency fund in an investment account.
Both of these strategies require no effort on your part or additional money.
This content is for informational purposes only — not professional advice. Consult a qualified professional before making any major decisions.