How We Saved A $10k Emergency Fund

Having an emergency fund, or a rainy day fund, is an essential part of any responsible personal finance plan. Here is how we saved $10k in our fully funded emergency fund.

We determined our “Bare Bones” budget

The first thing you need to do when you decide to save your fully funded emergency fund is to determine what your overall goal is. For us, we wanted at least three months of our basic expenses in a high yield savings account.

Here are the four categories of a bare-bones, or basic expenses budget:

• Housing

  • Rent or mortgage payment

  • Rent insurance or homeowners insurance

• Transportation

  • Minimum car payment

  • Gas

  • Car insurance

  • Regular maintenance

  • Parking

  • Public transportation fees

• Food

  • Groceries

  • Pet food

• Utilities

  • Water/Sewer

  • Electric

  • AC/Heat

  • Internet

  • Cell phone

Total up these line items for one month. That’s your one month emergency fund. Multiply that by 3 and you have your minimum fully funded emergency fund.

For us, it’s pretty simple:

• Housing: $2,100

• Food: $850

• Transportation: $300

• Utilities: $300

This comes out to $3,550 per month. When multiplied by 3, that comes out to $10,650.

It’s important to note that everyone’s bare-bones budget is going to look different. The amount will depend on the total number of people in your household, your geographic location (if you live in a high cost of living area), and what you feel you can and cannot live without.

We determined our fully funded emergency fund goal by the basic essentials of keeping our lives together. No frills.

We made savings a priority for our income

Not making savings a priority is easy. When it’s not top of mind, it never gets done.

There is temptation to spend everywhere.
Inflation is at a 40-year high.
Spending elsewhere seems to be higher priority.

The economy has been rocky this year, COVID taught me the importance of saving money, and I’m an entrepreneur. All of these reasons made us hyper aware of the urgency of a sufficient emergency fund. We made sure that we were both on the same page about making a fully funded emergency fund our highest personal finance priority.

While I enjoy taking risks in other areas of my life, I also like to cover my own ass. This makes being risky more fun. With my fully funded emergency fund, I am able to operate from a place of security.

I show up better in my job and in my relationship.

This peace of mind is priceless and we wanted to get there as fast as possible. That’s why we made savings a priority for every dollar that came into our household.

We’re debt free

When you free up money from monthly payments and the weight of high interest rates, you can afford to put saving at the forefront of your financial goals.

In 2020, Experian reported that the average American had $92,727 of consumer debt — yes, this includes mortgages. That’s beside the point though — the point is that being in debt is extremely common, nothing to be ashamed of, and pushed as the only way of life in our consumer society.

That isn’t the one and only way to live though. It took sacrifice, determination, and a lot of time, but I was able to pay off $71,000 in five years.

This does not mean I think you should put off saving an emergency fund until you get out of debt. It’s quite the opposite actually. You need to always be saving money, regardless of your debt situation. Having an emergency fund while you pay off debt is crucial so you don’t fall back into debt.

If you’re interested in learning how we paid off debt on a low income, click here.

We’re DINKs (Dual Income, No Kids)

My husband and I are child-free by choice and we have two incomes.

Not having children, which on average cost $12,980 each year (2015, USDA), which I’m positive has only increased in the last 7 years, gives us much more room to save money and not spend our income on diapers.

This is obviously our personal choice, but a large reason we could put money away.

We put windfalls and large chunks of money into savings

One way to turbo charge your emergency fund is to earmark large chunks of money or windfalls before they show up.

Tax returns, cash gifts, large Rover gigs, larger than normal paychecks — all went straight into our saving account.

We tracked our spending and budgeted (most months)

Budgeting and tracking our spending was key to hitting this goal. Why? Because if you don’t know where your money is going, you aren’t going to know if you’re living below your means.

And living below your means is basically the only way to get ahead financially for “normal” people.

We track our spending each month, make sure we have a budget that aligns with our financial goals, and try to spend as closely to that budget as possible. We also keep our cost of living as low as humanly possible.

This means that we negotiate our bills one or two times per year to make sure we’re getting the best, most affordable rates possible.

If you’re interested in learning more, click here.

We understand opportunity cost

Making our savings account a priority meant that we couldn’t travel as much.
Making our savings account a priority meant that we couldn’t eat out as much.
Making our savings account a priority meant that we couldn’t buy as much shit.

Opportunity cost is something that each and every household has to consider when their finances are involved. You can’t do everything because you’re not a billionaire. So choosing one thing over another takes intention and discipline.

Now that we have a fully funded emergency fund, we’re excited that we will be able to travel, eat, and buy shit more often.

Not as much as Musk, but you get my drift.

We worked more

We had to work our asses off to make this happen. Not only am I a full time business owner, I also dog sit on the side and run my own brand.

My husband decided to get a job at a local brewery to bring in more money for our savings goals.

The reality is that this would have taken even longer without injecting ore income into our bank accounts.

We understood it would take a while

This shit didn’t happen overnight, y’all. I’m on year 7 of my financial freedom journey. And A LOT of life has happened in those years. Lots of ups and downs. Lots of mistakes. Lots of money.

Paying off debt, saving money, investing — it’s a long term game.

What I like to remind myself though, is that the time will pass anyway. I’d rather be working on my money goals than not.