After losing her job of five years in November 2009, Cindy Campbell of Upper Marlboro, Md., couldn't find work until April 2010. But because she had an emergency savings fund, she was able to make it, according to the Chicago Tribune.
"Thanks to my savings and keeping my bills to a manageable amount, I was not worried or drastically affected," Campbell told the Chicago Tribune.
She kept six months' worth of costs in her emergency fund and lowered her monthly expenses by paying off her car loan, having no credit card debt, got a low-cost phone and didn't have cable TV for a year, according to the article. Once she got a new job, she started building up her emergency fund again, which she used when she took 16 weeks off for unpaid maternity leave.
For people wanting to build up an emergency fund, here are some tips on how to do it, according to the article.
- Start immediately. The more people make, the more they spend. So waiting for a higher salary won't do any good.
- Start by saving a small amount because it will add up over time.
- Make the goals and budget simple. Having a main objective makes it easier to focus on that goal.
- Write down each goal. Having something specific in mind makes it more real.
- Set up an account for each goal. Have separate accounts for education, a vacation, a car, etc.