Start an Emergency Fund with a “No-Spending Month”

a large glass jar of coins and a small glass jar of coins

If you can withstand a financial emergency, you deserve a pat on the back.

Nearly half of Americans are living paycheck-to-paycheck, and over 60% don’t have enough savings to cover six months of expenses, according to GOBankingRates’ survey.1

Working just so you can cover day-to-day expenses can lead to one of the worst money mistakes of your life — not having an emergency fund.

Without it, you could be forced to go into debt to pay for emergency medical care, a broken car that you rely on to get to work, a busted water heater, job loss or any other unexpected event.

Trust us — sooner or later, something will pop up that requires immediate financial attention.

A good first goal for emergencies is accumulating enough to cover a $1,000 expense.  After that, work to increase your funds to a cushion of one month’s living expenses, then three months’, then six to twelve months’, and so on.

To give your emergency fund a good kick-start, challenge yourself to a month of no spending.

Not Spending for a Month

Sounds a little intimidating but don’t worry, we’re talking about non-essential stuff.

Start by sorting your expenses into “wants” vs. “needs.”  You know what these are.  It’s when you go to the grocery store and explain to your child why you get milk and eggs before cookies and candy.

Wants could include eating out, going to a movie, vacationing, extravagant date nights, drinking alcohol, excessive shopping, and anything else you can live without, like (dare we say?) cable TV or streaming applications.

Needs are pretty obvious.  You’ll want to pay your rent or mortgage, get medical care, buy groceries and pay your monthly bills.  In other words, don’t live without hot water or electricity just to save some money.

Pay in Cash Only

Do you go to the coffee shop a few times a week?  Either pay with cash — not your phone app — or make coffee at home.

The same goes for any other daily living expenses.  Leave your credit cards at home and bring snacks and lunch to work.  Watch broadcast TV and cancel your cable TV.  Ride bikes and picnic in the park with your loved one instead of going out for dinner and a movie on date night.

Do whatever it takes to not spend any money for a month, beyond the necessities.

Look at it this way: all “needs” should be paid with money you already have on hand and not with a credit card.  For example, the mortgage and water bills can be paid with a check or by transferring money from your checking account.

“Wants,” however, are often paid with a credit card and not thought about until a month later when the bill arrives.  For most of these, use cash if you want to take a “no-spending month” at least semi-seriously.  If you’re super committed, then avoid these “wants” for the one month and then assess if you can continue most, if not all, of your sacrifices.  Who knows, cable TV may not seem so important after you ago a few weeks without it.

What to do with the Savings

Hopefully, your accumulated savings will be enough to cover your expenses for a month.  At the end of the “no-spending month,” move the unspent money to a savings account or another account where you can get the funds relatively quickly if needed.  The point is to have it set aside for emergencies, which, by definition, require quick access.

After that challenging first month, decide how much you can now afford to put aside in your emergency fund on a regular basis, and consider doing so through automatic transfers.

Security and peace of mind in knowing you can handle paying for life’s emergencies may be worth sacrificing luxuries such as restaurant dinners.  If all it takes to beef up your emergency fund is downsizing your entertainment budget and taking shorter vacations closer to home, then a good night’s sleep and not worrying about paying for emergencies is probably worth it.

Does a “no-spending month” still sound intimidating?  Don’t go it alone!  Your Money Coach can help you create a budget and spending plan that will help you meet necessary expenses and reach your goals. Call 888-724-2326 today to get started!


1“Survey Finds Great Recession Aftershocks Are Still Rattling Americans.”  GOBankingRates, 26 June 2017,  Accessed 4 December 2017.