3 tips for building your emergency savings fund - Deepstash
3 tips for building your emergency savings fund

3 tips for building your emergency savings fund

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3 tips for building your emergency savings fund

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Create an emergency fund

Despite all the benefits that come from working as a freelancer, there may be months in the year where you may desire a steady income to feel you can pay the bills.

Establishing an emergency saving fund can help you overcome the fear of a dry month.

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An emergency savings fund buffer is vital for freelancers. It will help you to keep your head above water when your income fluctuates.

A zero-sum budget means living off last month's income alone. This can be done in the following way:

  • Start building a budget by assigning every dollar to a particular monthly expense.
  • Write down your bills, including rent and insurance.
  • Make a list of any debt payments and savings goals, and assign dollar amounts to each. As your income fluctuates, so will the dollars assigned to savings and debt repayment.

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Assigning 45 percent of your income to savings is essential if you're serious about building savings and have the ability to pay quarterly estimated taxes.

  • Allocate 30 per cent of your income towards taxes
  • 5 per cent for reinvesting in your business
  • 10 percent to build your emergency savings fund
  • The remainder can be used for living expenses or investing in your business.

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An emergency buffer consists of a specific metric you're trying to reach based on what you reasonably will need during a dry month.

Some have a checking account with two month's worth of bills saved. It covers rent, utilities, insurance and cell-hone bills. In addition, they have at least three months of living expenses built up in a savings account.

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