As a Law of Attraction Practitioner, people are often surprised when I write posts like this but actually if you’re struggling with money, creating an emergency fund is probably the very best thing you can do to help manifest more money.
In this post, I’ll explain why, how to create your emergency fund and how much you need.
What is an emergency fund?
An emergency fund is an amount of money that is separate from your current account that is only to be used in an emergency. Many people recommend starting with $1000 or £1000
When you don’t have an emergency fund in place and you have something unexpected happen such as a car repair that you haven’t budgeted for and you don’t have the money to pay for it, you have to put in on credit.
This money is not for a new pair of shoes you fancy adding to your existing collection.
If your only pair of shoes are falling to pieces, you need to look smart for work and have no money in your budget, this could be classed as an emergency.
How much money do I need in my emergency fund?
Many people including DAVE RAMSEY recommend a $1000 emergency fund. I’m in the UK and would recommend £500 – £1000 to start.
Now, what I would say is that anything is better than nothing and more is better.
When I first started my emergency fund I was in debt and found that even a couple of hundred pounds gave me some breathing space. It stopped that constant panic feeling.
Long-term, I recommend a minimum of 3 months’ living expenses. These would be the essentials, so that if something happened where your income unexpectedly stopped then you’d have 3 months to sort things out.
Ideally, an emergency fund covering 6 months’ living expenses gives you real peace of mind.
How to build your emergency fund (even on a super-tight budget)
As I said, I was in debt when I first started my emergency fund. I was on a super tight budget and really couldn’t see how I was going to build any sort of emergency fund but I understood why it was so important.
In my business I have money coming in weekly and I started putting £5 a week into my emergency fund.
I was totally convinced I’d be taking that money out by the end of the month but I didn’t. I made saving this money a top priority.
After some time I was able to increase this amount to £10 and I could see a nice amount of money building up.
I also sold some things on eBay and I did car-boot sales for several weeks putting the money into my emergency fund.
- AUTOMATE SAVING – Even if you can only add a couple of pounds, dollars… a month, start your fund and automate that saving. If you find you can manage that amount okay, increase it a little. Keep doing this.
- Aim to get your emergency fund to £1000/$1000 as quickly as you can. Put as much money as you can into this separate savings account
- Try to find ways to bring in extra money by selling things, taking on extra work for a while, start a side hustle…
If you’re in debt, I recommend paying your minimum payments and throwing any other spare money at your emergency fund until you feel you have a realistic amount saved.
For me, this was £300. Once I had this amount I let my automated payments build up and focused on clearing my debt as quickly as possible.
Please be realistic about how much an emergency could cost you. For example, do you have to pay for a hospital visit in your country?
Why focus on your emergency fund more than paying off debt?
When you’re in debt, you’ll no doubt want to clear it as quickly as you can but if you don’t have anything set aside for emergencies, you’ll just add to your debt any time anything happens.
Instead, I encourage you to build a sensible fund and then throw as much as you can into paying off debt. ALWAYS PAY AT LEAST THE MINIMUM PAYMENTS.
My emergency fund story
As I mentioned at the start of this post, I’m a Law of Attraction Practitioner so regularly talk about focusing on things like abundance, prosperity, wealth…
So some people are surprised when I talk about practical things like managing money, getting out of debt, and creating an emergency fund, so, let me explain why these things can really help with manifesting money.
At the time of qualifying to be a Law of Attraction Practitioner, my marriage had just ended, and I was about to move country alone with my son to live with my mum and start over completely.
I had around £1800 to my name and I had some major limiting beliefs about money.
Eventually, I was able to rent a nice house for my son and me whilst working various part-time jobs and trying to build my coaching business but I still had really big hang-ups about money.
I was really rubbish at managing my money and I often spent money unwisely. I got myself into debt and then I had some major problems with my car. I live in a rural area and no car was not a realistic option.
REALITY CHECK – The car problems weren’t huge but they felt huge because I had no money for them and I was already in debt. I actually cried in the garage when they told me how much the repair would be.
It was a very low time for me. I couldn’t see a way out and I felt completely out of my depth and unable to control or improve the situation.
I got the repair done and added to my debt and then said NO MORE. This is when I started my emergency fund by automating £5 a week.
A change of mindset
Once I had set up my weekly automation and I had been able to build my emergency fund up over a couple of months without taking any out, I went from… “I won’t be able to do this!” thinking to… “Oh, maybe I can do this!”
Once I got to that £300 mark something really shifted in my mindset. I felt like a huge weight had been lifted from my shoulders.
Not long after this, I had an unexpected car repair, and that week I’d had a little extra money coming into the business so I didn’t even need to touch the emergency money.
I remember thinking I must look weird when I paid the bill. I felt so happy and proud of myself that I was able to pay it without adding to my debt.
My emergency fund took me from constant panic and tears every time something unexpected happened to a feeling of being in control. This shift in mindset has grown more and more powerful over the years.
I used to feel like I had a terrible relationship with money and now I feel like I’ve got a really good relationship with money.
When you think of the law of attraction, which mindset do you think is more of a match for manifesting more money? I can tell you it’s the second.
The more positive your money mindset, the more of a match you become for manifesting more into your life.
The mindset I used to have definitely blocked money from showing up for me. Then, I was a match for not enough and for being in debt.
Keep inspired to build your emergency fund
When I was building my emergency fund and getting out of debt, I had to say NO to lots of things I wanted to say yes to.
So, it’s important to keep inspired during this time. You can watch my emergency fund video and just type in EMERGENCY FUND to YouTube and you’ll find loads of videos with people talking about how they did it.
I like watching DAVE RAMSEY. I still watch his videos when I get tempted to blow my budget. Note, he’s not for everyone, but I personally find his style of talking helpful.
More posts to help you manage your money and develop a positive money mindset
- 25 Ways To Save Money And Get Out Of Debt – Practical and mindset tips to help you take control of your money
- 4 Essential Savings Accounts When You’re On A Tight Budget – These accounts will help you to make sure you have fewer and fewer unexpected expenses and when you do, you’re sorted – The Emergency fund is one of the accounts I recommend
- Money Management and Creating a Positive Mindset About Money – more money mindset tips
Also, check out my MONEY SERIES on my YouTube channel.
Debt-Free Living Download
I’ve put together a special debt-free living download following my 10-step system to get out of debt and start saving, plus tips to save money.
DOWNLOAD – DEBT-FREE LIVING
I’d love you to share this post anywhere you can. Thanks – Wendy – Your online life and business coach.
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