This piece is part of my 2016–2026 archive migration. Some original formatting, content, and external links may be missing, changed, or not be optimized.

You Can’t Be Caught Off Guard With A 1 Year Emergency Fund

Five ways I established one year of expenses

If they can cover it, it’s usually in the form of a credit card.

Debt is the primary way we fund planned and unplanned expenses. And we’re not counting this habit’s costs, which digs us into more debt.

The longer you continue this path, the more challenging it becomes to get out of debt. It’s not impossible, but you’re creating a mountain instead of a hill.

The only way to shift the pattern of using debt to fund your life and emergencies is to start spending less than you earn.

The Five Ways I Established 1 Year Of Expenses

Determine what amount you need to save.

Decrease my expenses.

Increase my income.

Continue investing.

Save ferociously.

1 Determine The Amount You’re going to need to ask yourself a few questions before you start the process of funding your 1-year emergency fund: First, what is the monthly cost of your expenses? Second, is this number the lowest amount of expenses you can pay? Third, what is the monthly cost of your expenses multiplied by twelve (months)?

If you are living on your emergency fund, you want to ensure you eliminate and decrease as many non-essential costs as possible; this is a bare-bones fund.

What does bare-bones equate for you, and what can you cut out?

Whatever you decide you can cut out if you had to, consider cutting it from your budget to save on costs now!
#2 Increase My Income

When your income is fixed, you limit the amount of money you can save each month unless you decrease your expenses significantly. But you can only decrease your expenses so low (to $0).

Increasing your income is always a better game to play in combination with decreasing your expenses.
#3 Continue Investing

It might seem contradictory to focus on two goals at once, but you should continue your investing efforts while you’re funding your emergency fund.

Investing your emergency fund in a low-risk fund is prudent, so you’re not sitting on a pile of burning cash.

One thing you can never get back is time; spend it wisely and continue your investing efforts while you’re saving.
#4 Save Ferociously

Whether you’re saving for a one-month, three-month, six-month, or twelve-month emergency fund, you must attack the goals aggressively.

Funding this emergency fund will be your chief aim/focus.
#5 Decrease My Expenses

If you want to save a one-year emergency fund, you will likely need to decrease your expenses unless you bring in a sh*t load of additional income each month.

But this will be a temporary decrease until you reach your goal.

On The Flip Side

This content is for informational purposes only — not professional advice. Consult a qualified professional before making any major decisions.

This content is for informational purposes only — not professional advice. Consult a qualified professional before making any major decisions.