Posted By 
In the quest for financial stability amidst major life milestones, we gathered wisdom from Finance Experts to CEOs, compiling twelve diverse strategies.
From establishing a safety net to applying the 50-30-20 budgeting rule, these professionals share how they’ve successfully built and maintained emergency funds while pursuing family formation and homeownership.
- Establish a Safety Net
- Adopt Frugal Living Practices
- Set Achievable Saving Goals
- Automate Savings Allocation
- Implement Disciplined Saving
- Live Below Your Means
- Reduce the Temptation to Spend
- Diversify Income with Side Hustles
- Maintain Emergency Fund While Home Owning
- Strategize with Automatic Transfers
- Manage Spending, Build Runway
- Apply the 50-30-20 Budgeting Rule
Establish a Safety Net
As a seasoned finance expert, I understand the critical importance of establishing and maintaining emergency funds, especially when navigating major life milestones like family formation and homeownership. Here are some strategies I recommend for achieving financial security while pursuing these goals:
Building the Safety Net: We suggest a reserve that equals three to six months’ worth of living costs, which acts as a buffer for matters like falling sick, fixing a car, or losing employment. You can begin by making small deposits into a high-interest savings account and then building on it gradually. Save everything!
Goal-Oriented Saving: After setting up an emergency fund, the next step is to save towards your dream house. Consider putting money into Fixed Deposits or Recurring Deposits, as they have guaranteed returns and help inculcate discipline, too. Remember to stay consistent! — Arifful Islam, Finance Expert, Sterlinx Global LTD
Adopt Frugal Living Practices
My husband and I have built and maintained emergency funds by continuing to employ financial tactics we had to use early on in the pandemic, when COVID-19 lockdown-related issues resulted in his salary being temporarily reduced and my hours being cut back.
We were adamant about the need to continue adding even a small amount to our emergency fund since we had purchased a home only the year before. Thanks to friends’ and family’s experiences, we were well aware of the ever-present chance of a home-related emergency.
We decided on a two-pronged approach: We lived beneath our means by greatly curtailing our travel, cultural, and dining-out budget, finding free and low-cost alternatives to enjoy closer to home, as well as cooking new items at home.
We also became savvy consumers. We started comparison shopping for budget items, both big and small. Our biggest savings came from comparing car and home insurance companies: When we switched to a new company, we saved over $700 a year.
Given today’s inflation, these tactics still serve us well. — Michelle Robbins, Licensed Insurance Agent, Clearsurance.com
Set Achievable Saving Goals
The strategy I followed for building my emergency fund took a decent amount of time. My plan was to cover three to six months of living costs. I was well aware that saving that much money would take time. So, I started with simple goals like saving $10 a day.
I somewhat understood that the savings goal depends on income and expenses. So, I tried to cover essential expenses first, rather than transferring all my income to savings. I paid off costs such as housing, utilities, transportation, food, and credit-card/loan payments before anything else. Then, I added up my monthly spending and multiplied it by six months. I got the estimated total amount I need to save as an emergency fund.
I decided to keep my funds in a high-yield savings account. These types of accounts are convenient to access and offer good interest rates. As a result, your funds will grow gradually. However, I suggest choosing banks and credit unions insured by the National Credit Union Administration (NCUA) or the Federal Deposit Insurance Corporation (FDIC).
Last but not least, it is better to use a direct deposit service to transfer your money into your bank or savings account. Contact your bank and activate the direct deposit service. It would be wise to split direct deposits and put a certain amount in your emergency fund and the rest in your checking account. — Loretta Kilday, DebtCC Spokesperson, Debt Consolidation Care
Automate Savings Allocation
I’ve always prioritized building an emergency fund because it’s crucial for my family’s financial security and peace of mind. Early in my career, I adopted a simple yet effective strategy: automate and allocate.
I set up automatic transfers from my business income to a separate high-yield savings account every month. Initially, I aimed to save at least six months of living expenses, which I gradually expanded to cover an entire year.
Treating this fund as untouchable for everyday expenses became a safety net that allowed my wife and me to comfortably pursue family goals like buying a home. To balance this security with growth, I also invested in low-risk, highly liquid bonds and money market funds for a portion of the emergency fund. — Michael Sena, CEO and Lead Analytics Consultant, Senacea Ltd.
Implement Disciplined Saving
Building and maintaining an emergency fund has been a cornerstone of ensuring my family’s financial security, especially as we pursued significant goals like family formation and homeownership. From my experience, the key has been a disciplined, proactive approach to saving, paired with a clear understanding of our financial priorities and potential emergencies.
Initially, I established a strict budgeting process where setting aside money for an emergency fund became a non-negotiable monthly expense, similar to mortgage or utility bills. I targeted saving at least three to six months’ worth of living expenses, a common benchmark that provided a safety net capable of covering unexpected events such as medical emergencies or job loss.
To stay disciplined, I automated the transfer of funds from our checking account to a high-yield savings account specifically designated for emergencies. This automation ensured that the savings occurred without requiring active management on my part each month, reducing the temptation to skip or divert these funds toward other uses. Choosing a high-yield account also helped the fund grow faster through interest, maximizing the efficiency of our savings.
As our family grew and our financial situation evolved with goals like buying a home, we reassessed our emergency fund needs regularly. For example, when planning for homeownership, we increased our emergency savings target to account for potential home repairs and maintenance, which are typically more costly than many renters anticipate. This adjustment was crucial in maintaining our financial security after transitioning to homeownership.
Throughout these phases, maintaining open communication about our financial goals and progress has been vital. Regular discussions with my spouse ensured that we were both aligned on our savings goals, understood the reasons behind them, and could track our progress together. — Michael Dion, Chief Finance Nerd, F9 Finance
Live below your Means
The secret to building wealth is living below your means. You need to be clear on the income coming in and the expenses going out. Pay yourself fi rst. The results of compound interest are powerful.
As your income increases, lifestyle inflation creeps in. Lifestyle creep occurs when an individual’s standard of living improves as their discretionary income rises and former luxuries become new necessities.
Avoid the urge to spend more as you make more. Instead, save more. Invest the difference. As you get a raise, give yourself a raise. Increase your 401(k) contribution. Add to your emergency fund. Your future self will thank you. — Melissa Pavone, Director, Investments CFP, and CDFA, Oppenheimer & Co. Inc.
Reduce the Temptation to Spend
In managing my own finances and advising clients at BlueSky Wealth Advisors, I’ve found that building and maintaining an emergency fund is crucial for long-term financial security, particularly when pursuing significant life goals like starting a family or buying a home. From my experiences, the approach of “paying yourself first” is a cornerstone in this strategy. This involves setting aside a portion of income for savings as soon as you receive it, rather than treating savings as an afterthought. This habit ensures that emergency funds are not only started but consistently grown.
For instance, one effective method we’ve utilized both personally and with clients is automating transfers to a savings account specifically earmarked as an emergency fund. By setting up automatic savings, you reduce the temptation to spend what you might otherwise save. Typically, we aim for an emergency fund that covers 3-6 months of living expenses. This buffer offers peace of mind and financial stability, allowing focus on other financial goals without derailing the overall financial plan in case of unexpected expenses.
Moreover, it’s crucial to assess and adjust your emergency fund as your financial situation evolves. For example, after a major life event like the birth of a child or a home purchase, you might find the need to increase this fund to accommodate increased monthly expenses. We often conduct annual reviews for our clients and personally, to revisit the adequacy of our emergency reserves, ensuring they match current life and financial situations. Adjusting these funds proactively can prevent financial strain when unexpected needs arise, thus protecting both immediate and long-term financial goals. — David Blain, CFA, Chief Executive Officer, BlueSky Wealth Advisors
Diversify Income with Side Hustles
In my experience working to guarantee the financial stability and future of my family, one of the most important lessons I have learned is that in order to grow financially, it would not only be enough to have more than a single stream of income, but it would be doubly effective if all these income streams are taken seriously.
With the severity of today’s economy, the truth is that families without a side hustle will most likely struggle to keep up with their basic financial needs, let alone be able to fund long-term financial goals, without incurring so much debt.
Having a side hustle is how I have been able to succeed at building and maintaining emergency funds for my family’s financial security, while also ensuring that we have enough funds left to pursue other long-term and short-term financial goals like home ownership and vacations.
Working on the side as a ski instructor has helped me ensure that I always bring home a decent income, enough to sufficiently provide for the basic needs of my family, and ensure that we have enough to guard and protect our financial future.
Additionally, becoming a host on Airbnb has also helped improve my family’s earnings; this way, we get our home to earn passive income for us, even when we are on vacation (this has also helped in reducing our vacation costs). — Tim Hastings, General Manager, TopRatedLaw
Maintain Emergency Fund while owning Home
Early in our marriage, my wife and I pursued homeownership with passion. It became an all-out run a few years into our marriage. But: that doesn’t mean it was easy. We knew we had to have an emergency fund even if we were pouring massive amounts of money into our home.
What if something broke? What if one of us got hurt? What if one of us lost our job?
These were questions we asked. They were all questions we had to answer. Thankfully, we had maintained an emergency fund as we pursued homeownership.
How?
We did three things:
- We made the emergency fund our first priority, next to homeownership. We made sure it was fully funded before we began to pursue paying off our home.
- We restocked the emergency fund when we used it. There would be a pause on paying extra on our mortgage when funds were pulled from the emergency fund. This ensured it was there in case an emergency arose.
- We cut back on our other expenditures. We wanted to be homeowners and responsible with our emergency fund. This meant we had to cut back in other areas. We ate lower-cost food, we didn’t go out to eat, and we stopped consuming costly entertainment.
All of these things helped us keep an emergency fund while pursuing homeownership. Eventually, it led to us owning our home outright before we turned 40. — Joseph Lalonde, Leadership Coach and Author, JMLalonde.com
Strategize with Automatic Transfers
As a CFO, I’ve approached family financial security with strategic planning and discipline. I prioritized building an emergency fund by setting aside six months’ worth of expenses, ensuring we have a buffer against unforeseen events. This was achieved through automatic transfers into a dedicated savings account, ensuring it grows consistently without requiring regular manual intervention.
Simultaneously, we pursued our goals of family formation and homeownership by creating separate saving streams and leveraging tax-advantaged accounts, such as HSAs and 529 plans, for medical expenses and educational savings, respectively. Regular financial reviews help us adjust our plans as our family’s needs and goals evolve. — Rose Jimenez, Chief Finance Officer, Culture.org
Manage Spending, Build Runway
To ensure my family’s financial security, the first crucial step was ensuring I consistently spent less than I earned. Managing this involves either finding ways to increase income, which is challenging, or reducing expenses, which is relatively easier. I closely monitor what I call our “private runway”—the cash we have versus our monthly family expenses.
I maintain at least three months of runway at all times, aiming for six to twelve months to safeguard against unexpected financial needs. Any surplus cash beyond this safety net is invested to generate passive income, optimizing our financial resources without holding too much cash idly. — Rafael Sarim Özdemir, Founder and CEO, coachingausbildung.net
Apply the 50-30-20 Budgeting Rule
The truth is sometimes the best way to accurately measure how high a goal ranks on a family’s list of priorities is to consider the alternatives they are willing and ready to forfeit in pursuit of it.
Implementing the 50-30-20 rule is one strategy that has enabled my family and me to ensure our financial security, as well as to keep up with our major financial goal, which at the moment is paying off our mortgage and ensuring that our kids’ college funds continue to grow at a healthy pace. We want to ensure that they are not caught in the web of student loans. By adopting this budgeting strategy, we have been able to make better financial decisions, ensuring that our cumulative earnings as a family are effectively channeled into fueling our long-term priorities as well as our immediate basic needs.
It is through this budgeting strategy and a persisting commitment to our goals that my partner and I have been able to judiciously scale through the bumpy road of an overwhelming debt load, build and maintain our family’s emergency funds, and find success in our goal of achieving financial security for our family. — Edmafe Eclavea, Marketing Manager, Couponsnake
Featured.com creates community-driven content featuring expert insights. Sign up to answer questions and get published.
