If you DON’T already have an emergency fund, don’t worry – read this post about how to create a mini emergency fund in just 1 month!
Emergency funds are great. They give you comfort to cover unexpected expenses without wrecking your finances.
A sense of peace comes from having an emergency fund. You don’t have to worry about how to meet your expenses if a job loss or car repair were to happen. An emergency fund has your back.
Building one is a feat in and of itself. It can take months or years of diligent saving before reaching a fully funded e-fund.
Once you do end up getting the recommended three to six months of expenses, you’re left to wonder. What’s next?
You’ve spent all this time cutting back, making more, and saving. What comes after? Without a plan in place, it can be easy for lifestyle inflation to creep up on you.
In order to stay on track and reach your financial goals, here are some things you can do after building up an emergency fund.
1) Pay Down Your Debt
Debt is a huge burden for many people. It limits your options, creates more stress, and commands a lot of your attention.
Whether you’re having to deal with student loans, credit card debt, or auto loans, you should get a handle on them. No matter how much debt you have, it’s important to get clear on how you will go about repaying it.
If a high-interest rate is limiting your progress, look at your options. Consider refinancing your student loans or transferring your credit card debt to a balance transfer card.
Get on a debt repayment plan. The two most popular ones are the debt snowball and debt avalanche methods.
The debt snowball method involves paying down the lowest debt balance first. The debt avalanche method involves paying off the debt with the highest interest rate first.
On paper, the debt avalanche method is the best one since you’re saving more money by getting rid of the highest interest debt first. Although, many people swear by the debt snowball method since it allows you to celebrate “quick wins” from paying off the lowest balances first.
Choose which one works best for you.
2) Save For Retirement
Now that your emergency fund is fully funded, you can put a greater emphasis on saving for retirement.
Saving more for retirement allows you to grow your wealth faster. The more you contribute, the sooner you are able to reach financial independence.
If you’ve been contributing to an employer-sponsored 401(k) plan provided through your job, consider upping the contribution amount. If you’re currently contributing 5% of your pay, up it to 10%.
Make sure you’re contributing enough to get the employer match. For example, if you’re employer offers a 4% match, then contribute at least 4% so you’re able to get the full employer match. You don’t want to turn down free money!
If you don’t have access to a 401k through your job, you can open your own investment account through an online brokerage like Vanguard or Betterment. There are some online brokerages that let you get started investing for as little as $10.
Remember, it’s not too late to start saving for retirement. Don’t get discouraged if you can’t max out your accounts or contribute a lot.
The important thing is to start contributing and do it consistently.
3) Track Your Net Worth
Your net worth is a useful thing. It can be a helpful way to gauge where you stand in your financial journey.
What’s your net worth? It’s your assets minus any liabilities you have.
Your assets are essentially everything you own. Liabilities are everything you owe. Assets would include things like your vehicle, home, personal property, investment accounts, and bank accounts, Liabilities would include things like credit card debt, student loans, auto loans, and medical debt.
Using a free service like Personal Capital, allows you to pull together all of your assets and liabilities and track your net worth in real time.
Knowing your net worth can be a powerful way to chart your progress. You’ll be able see if you can really afford something. Getting a full picture of your finances.
4) Spend Less
You’re probably already familiar with this. While building your emergency fund, you probably got used to analyzing your expenses and cutting your spending.
Don’t become too comfortable. It is worth it to go through again and see if there is room for any further adjustment. Consider negotiating your car insurance. Call in and get your internet bill lowered. Look into cheaper alternatives.
Get creative with how to maximize your lifestyle while living on less.
5) Monitor Your Credit
A good credit score is essential to being able to secure good mortgage interest rates, getting approved for an apartment, cell phone, and in some cases even to be considered for employment.
Aside from the advantages of good credit, a big reason to monitor your credit score and report is to make sure no one is stealing your identity. Last year, Equifax had a massive data breach that exposed thousands of people’s sensitive information.
It’s important to periodically keep an eye on your credit to make sure there are no alarming incidents or breaches.
You can check you credit score for free through Credit Sesame and get a free annual credit report through annualcreditreport.com
6) Do a No-Spend Challenge
No spend challenges can be a great thing to do, no matter where you are in your finances.
A no-spend challenge can be done a few ways. You could choose to not spend in problem areas or impose a total shopping ban by not spending money on anything outside of necessities.
You can do them for a weekend, week, or one month. They’re challenging but effective to do. I’ve done them in the past, journaling in the process, and have always finished them with a new sense of how I spend money.
They can be a good way to get clear on your values and how you want to prioritize your spending.
7) Set Long-Term Goals
You don’t want to work towards something without somewhat of an idea of the end goal. What are your long term financial goals you’re eager to reach?
Do you want to travel more, buy a house, change careers, or retire early? Maybe you want to do a mixture of several. Whatever your goal is, get clear on it.
Spend some time and write down your goals. Reflect on what your need-to-haves are vs. your nice-to-haves.
Writing down your goals can keep you motivated on your path towards building wealth.
8) Educate Yourself
You’ve saved up a fully funded emergency fund, so I’m sure you’re no amateur when it comes to personal finance knowledge.
However, don’t rest on your laurels and allow your knowledge to end. Keep learning, reading, and uncovering more.
Read personal finance books, learn new skills to leverage new opportunities. Be open to expanding your mindset.
Have you saved up a fully funded emergency fund? What things have you done after building one?
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I’m agree and now I’m really focused on savings so I thinking to do a sort of shopping ban and n-spending challenge…great tips thanks for sharing!
Saving for retirement and tracking my net worth were at the top of my list! I built my emergency fund while paying off my debt, and it saved me more times than I’d like to admit lol. Such a good list!
We’ve had an emergency fund for several years now. Today, we do a combination of all eight of your suggestions on a monthly basis. We put most of our money toward paying off debt and investing since they have the most upside for us.
We also review our spending each month to make sure we don’t have to pull from our emergency fund to pay our regular monthly bills.
Because we have an emergency fund, we don’t stress about not having enough money to pay our bills. It’s a great feeling and I highly recommend it.
Since I have a decent emergency fund, I’m focused on two things. The first one is paying off my debt. I ‘m working very hard to get rid of my credit card and student loan debt. The second thing that I’m doing is tracking my net worth. I’m still in the negative, but it won’t be like that forever.
I am wondering why the emergency fund comes before all these other things. i guess I see personal finance as a balance your work on debt, retirement, keeping spending in line. While building a emergency fund. We do not have a large emergency fund yet we save5% for it but it’s not a priority
After building out my emergency fund I started contributing 16% to my retirement and maxing out my Roth IRA for the past two years. I also set up a direct deposit of cash that goes into my house fund and not my main checking or savings and isn’t included in my budget. Set it and forget it!!