This is how you're going to start an emergency fund.

Ok, you’re in. You are going to build a pile of cash.

Here’s how you do it.

Step 1. What’s your savings goal? You need a NUMBER. Picture in your mind and dream that one day your savings account could show you that number. I have been with people on day one when it was just a vague idea and then on day 625 when they email me a picture of that number in the account (and folks, I can tell you, this never gets old). Consider the age-old wisdom of 3-6 months of living expenses in an account. The easiest way to do that is to get your take home pay, or what hits your bank account, and get that on a monthly amount. Then multiply the monthly amount times 3, 4, 5 or 6, and there is your savings goal. 

Step 2. Choose where this money will go. If you think it should go in that savings account nestled next to your checking account that provides overdraft protection and that you literally see every time you open your online account, think again. I want you to pick a bank, preferably not your current one, that you don’t look at. Think of this as a “deposit only” account. LOTS of my clients (including my husband and I) chose to open a high yield savings account at online only banks like Ally or American Express. They don’t have the expense of brick and mortar banks so they can offer more interest on your money. Plus, they make it super easy to start up the account.

Step 3. Pick your timeframe for funding your emergency fund. But at the same time, you need to be realistic.  I want you to be bold, like car payment bold. If you have a savings goal of $10,000 for 4 months of expenses, consider having your funding goal be 3 years. $10,000/3 years/12 months would equal $278 per month.

Step 4. The most important step. Automate, automate, automate. You want to figure out how to fund this thing without any effort after setting it up. Literally, you never want to touch any part of the emergency fund “Funding” process. The easiest way to do this is to go to your HR or payroll department at your company and ask them to fund the savings account (come prepared with the account number) with $278 per month. THIS WAY THE MONEY DISAPPEARS AND NEVER HITS YOUR CHECKING ACCOUNT. Most companies can do this for you. After seeing thousands of people come through our retirement plans and personal financial planning service, I can tell you that step 4 is more powerful than you think. Sure, you will “feel” that first deposit, but with the automation I can promise you that you will forget you are doing it. Then one day you will open that account and see that money. And feel good. Really good. 

Watch how you feel as this pile of cash starts to grow. Like many people you will inevitably feel a sense of power, mostly the power over your own personal circumstances. This might include the ability to walk away from a job that is underpaying you (women still earn 77 cents on the dollar), the ability to have more maternity or paternity leave than the company offers, the ability to professionally advance because you can walk away, the ability to start your own business with seed capital to develop your product or service, and/or the ability to live without a paycheck while you develop a new  idea and make it happen!

Do not delay. 

Photo is our emergency card insert that you can add to your book purchase for just a dollar, and personalize for anyone in your life that you’d like to support by depositing in their emergency fund.