Jumpstart an Emergency Fund with 5 Super Hacks

Emergency Fund

Jump Start an Emergency Fund With 5 Super Hacks

Table of Contents

What is an Emergency Fund?

An emergency fund (or FU Money) is a pool of liquid money set aside for unforeseen expenses like becoming seriously ill or losing your job.

Having an emergency fund is a safety net in that it can be the difference between a small bump in the road or a major car crash.

Usually an emergency fund is a stash of 3-6 months easy to access cash, e.g. in a high interest savings account.

Another great benefit of having a robust emergency fund is that it gives you a psychological advantage.

A peace of mind knowing that you can lose your job or fall sick for 6 months and still be able to manage, and focus on your health and getting back to work.

So, do you have an emergency fund? If not go to my post clicking the link below to learn how to get started on your Emergency fund today.

In summary, an emergency fund has these three attributes:

  1. A reserve of cash that covers all your expenses for 3-6 months.
  2. Held in a separate account to your normal everyday and loan accounts.
  3. Readily accessible (i.e. must be in a savings, chequing or cash type bank account).

My recommendation is Xinja Account. It is Simply Awesome! Check out my review below.

Related Post: Xinja Review

How to Jump Start the Emergency Fund

Hack#1 - Save Like a Badass

The first option is to allocate 20% of your gross income to saving for this fund. This is the hardest method!

But Wait! There are two conditions you need to address before starting saving hard for the Emergency Fund

The first condition is that you must have at least $1,000-$2,000 in a ‘Rainy-Reserve’, that is, a balance of $1k-$2k in your everyday cash account.

This is ‘rainy-reserve’ carrying balance is for more smaller monetary upsets, like a crashed car, or your house is broken into etc.

The second condition before you focus on your emergency fund is to ensure you have paid down all your consumer debts (credit cards, personal loans, car loans, furniture loans etc).

Paying down your debts is critical and has the biggest return for your financial health.

So if you have not paid down your consumer debt, STOP!

Go check out the Debt Destroyer Method to destroy these debts, then come back here for some ideas on how to build your emergency fund!

Now, if you have a home loan, investment property loan, student loan or business loans then you don’t need to pay these down before setting up your emergency fund.

Related Post: Debt Destroyer Method – Debt Free in 6 Simple Steps.

Hack #2 - Tap That Tax Return

If you expect to receive a tax refund at tax time, then peg that money for your Emergency Fund. A tax refund is an awesome way to get a lump sum in one go which you can apply to your Emergency Fund.

There are many reasons why people get tax refunds at tax time, investment properties, tax offsets, educational expenses, work related expenses etc.

If you can peg this money for your Emergency Fund this will be a nice quick start to your goal amount.

Emergency Fund

Your tax return is waiting to be tapped to jump start to your Emergency Fund.

Hack #3 - Dip Into Your Redraw Facility

If you have a redraw facility on a home loan, why don’t you just take the money you have already forced saved and put it into a separate high interest saver and make this your Emergency Fund.

This is a super-fast way to get access to your money which you have already saved through a forced savings for your home loan repayments.

Yes, it will delay your debt repayments, but you will have psychological peace of mind knowing you have your own Emergency Fund set up, just in case, and the bank cannot get its grubby paws on this money by the way.

Hack #4 - Refinance Your Home Loan

If you have a redraw facility on a home loan, why don’t you just take the money you have already forced saved and put it into a separate high interest saver and make this your Emergency Fund.

This is a super-fast way to get access to your money which you have already saved through a forced savings for your home loan repayments.

Yes, it will delay your debt repayments, but you will have psychological peace of mind knowing you have your own Emergency Fund set up, just in case, which the bank cannot get its grubby paws on by the way.

Hack #5 - Hack, Hack & Hack
House Hack

House Hacking is simple. If you have spare rooms, rent them out! You can sub-let or do an Airbnb option.

Another option is to section off a part of your house and rent that out, if this is feasible.

Then obviously apply 100% of this new passive income to the Emergency Fund.

Garage Hack

Spacer is an Australian platform that connects people with rentable space to people who need space to rent. 

If you have a shed, garage or car park that is free, then get on this platform and rent out your space to make some passive income.

Then obviously apply 100% of this new passive income to the Emergency Fund.

Car Hack

CarNextDoor is an interesting service that connects people who have spare cars to people who need a car. 

The owner gets a passive income for an asset that sits idly around. The renter gets a great rental rate, compared to commercially rented cars. 

Then obviously apply 100% of this new passive income to the Emergency Fund.

I’ve been using Car Next Door for about 6 months. To see if this is the right entriFIneurial experiment for you, check out my review of Car Next Door below.

Related Post: Car Next Door Review

Summary

So there you have it, 5 hacks to get your emergency fund up and running quickly. 

All the best!

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The EntreFIneur
The EntreFIneur

EntreFIneur is a passionate frugalist, FI enthusiast, experimenter, ideator and entrepreneur. He's also a family man and when he has time, an active fitness fiend and outdoor hobbyist.

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