How to Build a Emergency Fund

How to build an emergency fund landing page imageIf the water heater breaks, you don’t want to be forced to beg or borrow just to make it through. An emergency fund can be your first line of defense against months or even years of debt. So how do you build one without giving up the ability to live your life? It all comes down to tricking your brain into making it easy. Try these simple steps and you’ll be on your way to feeling in control of your cash flow before you know it!

  1. Open an account at a bank on the other side of town – The first step to building a sizable emergency fund is to have a place to put money that’s out of sight and out of mind. In most cases, a simple checking or savings account will do. Don’t be bothered by the extra bells and whistles that banks can charge you. You’re not even looking to invest this money. The purpose of this account is easy access in case you need it. Choose the free version and keep it simple.
  2. Timing is everything – I strongly suggest a plan that includes putting money into your emergency fund each time you get paid. If you get paid weekly, your emergency account should be funded weekly. If you are paid bi-monthly, you should contribute to your emergency fund bi-monthly. Since most people are living paycheck to paycheck when starting to set aside reserves, this strategy will help you eliminate the timing challenges that come with savings.
  3. Any amount will do when starting out – For the first month, I suggest just getting started. Don’t stress over how much you need to save each pay day. Pick an amount that you can live with and go with it – even if it’s just $25 per paycheck. You’ll most likely find that you won’t miss it and you’ll be able to easily increase the amount any time you want. If you want to challenge yourself, that’s fine. Just be careful not to overdo it. It’s better to start small and increase than to start big and fail.
  4. Make it automatic – The most important part of the equation is to establish an automated link from your primary checking account to your new emergency fund account on the same day you get paid (or one day later). Ask your primary bank if they can setup automated transfers to this new account or ask your employer if they can direct deposit an amount there each pay day. If those aren’t options, ask your new emergency fund banker whether they can pull money into this new account from your primary checking account on their end. If that doesn’t work, setup automated bill payments from your primary checking account on the same day that you get paid so that a check will be sent to your new bank on a regular basis. Keep in mind that your plan has a high chance for failure if you are forced to manually transfer money or write a physical check each time. You should opt to set it and forget it.
  5. Don’t look at your statements – Okay, in good conscience I have to tell you to keep a watchful eye on your new account to be sure you avoid fraud, banking errors, or unnecessary fees. But the bottom line is that the less frequently you look at the balance of this account, the more likely you are to let it accumulate without the temptation of touching it. Put a note on the calendar to review it every six months and focus more on reviewing the amount you’re saving each payday than the total account balance. Your goal is to set aside at least 3-6 months worth of money to cover your monthly expenses. And another thing – try not to touch it even if you need it. Look to this account as a last resort when things get tough.

Building an emergency fund is an important part of your overall financial health. I want to help you feel in control of your money by using proven strategies that make it easy on you. If you’re looking for a money mentor who can help you reach your goals, hold you accountable, and plan for the unknown, contact me today at

Should You Do a Balance Transfer?

Balance transfer image for landing pageYou are hoping to pay down your credit card debt and you’re considering a balance transfer to help you save money. Should you do it?

Credit card companies love to send you offers with low introductory rates and balance transfer options. And balance transfers aren’t always a bad thing. But there are a few things you should consider first.

  1. Transferring your balance is NOT the same thing as paying off your credit card. If you are going to move to a card with a lower interest rate than what you are paying now, that’s great! But you need to be disciplined and make payments that are large enough to pay off your balance before the rate increases. Otherwise, you could end up paying more interest over time.
  2. Balance transfers could hurt your credit score. Creditors want to see that you are paying your bills on time, reducing your balances to below 35% of your available credit limit, that you have a long history of using credit wisely, and that you are not repeatedly transferring balances from one company to another.
  3. Be sure to consider any balance transfer fees that may apply. Not every balance transfer is free and it is important to know what you will be paying up-front.
  4. Closing long-standing credit cards can hurt your credit score, so weigh the pros and cons of closing the credit card account you are transferring. If you keep your old card open, you will likely free up a lot of credit. But, if the temptation to use the old card is too great, it may be worth the short-term negative impact to your credit score to keep from incurring more debt.
  5. To transfer the entire balance of your current credit card, you would need to qualify for a high enough credit limit. That might not be possible. Even still, it could make sense to transfer a partial balance if you are disciplined enough to pay off the amount you are transferring over during the introductory period.
  6. Finally, the most important tip – QUIT USING YOUR CREDIT CARDS! If you really want to start saving money, you need to address the root of your problem and that very well may be that you have a spending problem. A cash reserve is an excellent alternative to using credit cards for emergencies, so consider building your cash reserve while simultaneously paying off your debt. This will keep you from racking up more debt in an emergency situation.

Have questions about balance transfers? Wondering how to put together a plan to save money, build up your cash reserves, and pay off your debt? Contact me at and together we can come up with a plan that works for you!

How Do You Go from Having No Money Leftover to Accumulating Cash?

Accumulating Cash Image for Landing PageOne of the most popular questions I’m asked is, “How do I go from having no money leftover to accumulating cash?”

One tip I often give my clients is to adopt a zero-based budget. What’s that you ask? A zero-based budget is just a fancy way of saying you should decide two things before you ever receive your paycheck:

  1. What amount are you going to put into savings each paycheck?
  2. How much of your paycheck would you like to give away to charity?

Now, here’s the trick – you AUTOMATE those two expenses so that they come off the top of your take home pay. An easy way to make this happen is to ask your employer to direct deposit a specific percentage of your paycheck into your cash reserve account and the rest into your primary checking account. Here’s something else to consider – if your savings account is held at a bank where you can’t easily access the money, you’ll find it will accumulate faster than you ever imagined!

Similarly, when you commit to putting money into your company’s 401(k) plan, your employer will automatically withhold your contribution from your paycheck which means you never get the chance to spend it!

Both of these savings strategies can have a powerful psychological effect on your spending habits because they are automatic and they help you avoid temptation. Let’s face it, saying, “no” to ourselves is the hardest part of budgeting! Next, if you develop the habit of making your charitable gifts the day you get paid, you’ll be able to spend the rest of your money knowing you’ve made a wise financial choice.

If you have any questions about how to adopt a zero-based budget or if you want to talk further about how to get ahead, please email me at I would love to hear from you!

Where Do You Go for Wisdom & Guidance?

Wisdom and Cents image for Valerie's blogIt’s easy to Google a topic and find lots of information. But information is NOT wisdom. True wisdom requires you to discern what information matters, to think about how you would apply that information, and to consider the moral implications of your decisions.

I have spent my career helping people make wise financial decisions and now I’m devoted to sharing the wisdom I have gained from my clients, from industry leaders, and from my own personal experiences with YOU!

I invite you to follow me on this journey by connecting with me on Facebook.

I hope to enrich your life with knowledge that truly matters.