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How to Build an

Emergency Fund as a


An emergency fund is something that everyone should have. This is especially true if you're a freelancer, since a freelancer's life can sometimes be unstable. 

Your income can vary from month to month, and this kind of instability requires you to make sure that you're making the most of your money when you have an abundance coming in. This is the best time to create your emergency fund.

Fluctuations are to be expected and you probably knew that this is what you signed up for when you decided to freelance. However, there are some things you can put in place to ensure that if you have a medical emergency or any other type of emergency, you will be more than ready to deal with it during the lean times.

If you don't know where to start, this contributed/collaborative post gives you some ways to create an emergency fund.

What Exactly Is an Emergency Fund?

An emergency fund contains money that you put aside in case you have a financial emergency. This money is to be kept separate from your other personal finances and savings for a house or for travel. 

Since this money will need to be put aside away from your regular savings it's a good idea to have it in a separate account. Depending on how you get paid, you can decide whether or not you wish to have a deduction done or if you will put aside the money in the account yourself.

If you can automate the savings, you won't have to think about it and it may make it easier to save. There are some apps that can automatically move a percentage into your emergency fund.

How Much Money Should Be In the Emergency Fund?

When you decide to start your emergency fund you may be wondering exactly how much money you should put into it. 

The answer to that depends on your expenses. However, in general, it is suggested that you have six to 12 months' worth of NECESSARY expenses in your emergency fund. 

Your emergency fund may not only target your personal finances but if you freelance and employ people to assist you, you will need to make provisions for that as well. 

Based on how you're paying your employees, you can decide how much you'll need for business expenses. During this time, balancing and assessing the pros and cons of salary vs. hourly pay is necessary. It's something you need to consider when choosing to employ people part-time or full-time.

Aside from your business needs, you may also want to consider saving money for rent or mortgage, utilities, health insurance, gas, and groceries.

The bottom line is you should try to focus on the things that are necessary when you are building your emergency fund. With that being said, budgeting for dining out or your subscription to a movie service may not be necessary as these should be the first things to go in a financial emergency.

Start By Tracking Your Expenses

One of the first things you will need to do to create your emergency fund is to track your expenses, so you know how much you need to put aside for your expenses in an emergency.

Decide how many months you wish to save for in case there is an emergency. If you don't know, base it on your risk tolerance. If you are someone who enjoys taking risks, you may only need six months of an emergency savings. If you're someone who gets very nervous about risk and needs more stability or security, then you may want to save up 12 months' of necessary expenses. And if you're somewhere in the middle, nine months will suffice.

As mentioned before, you need to have a separate savings account for your emergency fund. You also need to make sure that you're somewhat disciplined about setting aside the money, when you are working and making money.

The best thing you can do is to take a hands-off approach to putting money into your emergency fund. When you're not able to access the account readily, it will be easier for you to keep the fund in place. 

Automating is one way, but you can go a step further. 

If you look closely at what you're spending your money on throughout the month, you may be able to do without some things. When you're saving towards your emergency fund, it's always a good idea to trim the fat until you have reached your goals.

Build With Small Steps

One of the easiest ways to get your emergency fund up and running is to start small. Think of it as building one step on a ladder at a time. Even if you don't have a lot to put aside for your emergency fund right away, putting aside small amounts will help you slowly build up your funds. Even $5/month is better than nothing!

Set a small numerical goal and then stick to it. For example, you could decide to save $50 per month or $10 per week depending on what you can afford.

Another thing you should do is to be consistent. If you decide to save a certain amount of money each month, then go ahead and do so. No matter what happens.

Also, often you may get bonuses, tax breaks, or tax returns. Put away this type of money into your emergency fund instead of spending it.

The other thing you need to do is be patient. Sometimes, it may seem as if you are taking two steps forward and then two steps backwards but you must persevere. It's OK to not pay into your emergency fund when you're income is less or non-existent. And you may even need to use the money for a month or two. Just know that it's important to build it back up, when you do need it. 

Having your emergency fund up and running is critical and it's something that you need to dedicate yourself to and patiently build up over time.

Take Control of Your Finances

Taking control of your finances is a necessity if you are going to grow your resources and be ready for any kind of financial emergency that life offers.

An emergency fund is a perfect way to ensure that you have enough money should an incident that you had not planned for does occur. If you don't have this financial cushion, emergencies that come at the wrong time can be devastating. 

You may have to reach out to family and friends to borrow money or you may have to run into credit card debt to take care of the problem. The best way to avoid this is to plan for the unexpected by creating an emergency fund. 

This is also important when you employ others or have children. When you are going through good times and have money coming in, this is the best time to establish an emergency fund.