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For millions of Americans, the Covid-19 pandemic was a financial shock.
While the federal government stepped in to help, those who were best poised to weather the crisis had emergency cash set aside.
Experts say having an emergency savings fund should be a top goal in order to be able to cushion an unexpected financial blow without going broke.
The ideal number to shoot for is at least three months to six months’ worth of living expenses, according to certified financial planner Ted Jenkin, CEO at Atlanta-based Oxygen Financial. If you’re more financially conservative, you may want to put a year’s worth away.
Yet finding that extra income may sound like a high hurdle, especially in an uncertain economy. The good news is that you may be able to set cash aside just by changing how you handle the resources you already have.
1. Reassess your credit card habits
Chances are, big savings can be found by reassessing your day-to-day expenses.
Jenkin, who co-wrote a book called “The 21-Day Budget Cleanse,” recommends people take a detox approach to their household budgets.
Look at the 21 largest bills you have — if you have that many — and try to shop around or change them.
Take your bundled internet, phone and cable bill, for example. Ask your provider if there is an opportunity for a better package or rate. Also investigate the other options available to you through other companies.
“Most people really haven’t taken the time to see where they’re overspending and size up what the difference is,” Jenkin said.
3. Put your money somewhere safe
Even with interest rates still at record lows, a savings account at an online bank or local community bank is still the best place to go to make sure you’ll be able to access the money when you need it, Jenkin said.
If you lose your job or start a business, you’re going to want quick access to your cash.
“You can’t afford to put it into crypto or the stock market,” Jenkin said. “Doing that over three or six months is gambling.”
If you haven’t used something in a year — aside from family heirlooms or holiday decorations — it’s time to sell it, Jenkin said.
If you haven’t worn a shirt in a year, for example, you can unload it on a website like Poshmark. Electronics you’re not using can be sold on sites like Decluttr or Facebook, Jenkin said.
“There’s many, many apps and websites to basically sell your stuff,” Jenkin said.
If you’re not ready to part with an item forever — such as an extra car, for example — you may want to consider renting it out instead on a website like Turo.
5. Pick up a side hustle
Generating more money doesn’t have to stop at selling your things; you can also sell your skills, Jenkin said.
“If you have a hustle, skill or talent, try to earn that extra income to build up a cash reserve,” Jenkin said.