By MELANIE LOCKERT
You probably know that you should create an emergency fund. Emergencies come up, sometimes at the most inopportune times.
But saving for an emergency fund can be tough when you're trying to pay rent, manage student loans and pay off credit card debt. There are so many things competing for your dollars that saving often becomes an afterthought.
According to the Credit Karma Millennial Report, 31 percent of millennials don't have any type of emergency fund.
Not having an emergency fund could increase your likelihood of getting into debt, and it can turn an inconvenience like your car breaking down into a financial emergency. To avoid that kind of stress, building an emergency fund is key.
Need some inspiration? We spoke to five millennials on how they saved for an emergency fund.
Name: Laura Alix
Occupation: Financial journalist
How much she has saved: $4,000
Financial journalist Laura Alix built her emergency fund after her savings reached dangerously low levels.
"I did the broke-student-living-in-NYC thing for a few years, and my emergency fund dwindled below $300," Alix says.
Seeing her savings drop to such low levels inspired her to save more. Currently, she has $4,000 saved up.
"It's not the full three to six months' worth of living expenses that's usually recommended, but it's enough to cover a minor emergency without having to fall back on credit cards or family," she says.
Alix saved for her emergency fund by automating her savings and saving a portion of any windfalls she had. To help her save, she also decreased her spending and has turned any raises into increased savings.
Lastly, she sold her car which helped her spend less on gas and repairs.
Though Alix's goal is to get her emergency fund to $5,000 by the end of the year, she admits it's not her priority right now, as she's focusing on paying down her student loan debt.
"Having an emergency fund gives me a sense of control over my finances -- and my life -- and I feel much less stressed out knowing that a minor emergency won't break my bank," she says.
Name: Anthony Copeman
Occupation: Accounting professional
How much he has saved: $2,500
Anthony Copeman has student loan debt but realized that if he didn't have anything saved, it would likely lead him into credit card debt as well.
"I started saving for an emergency fund because I refused to use credit when unexpected expenses arose. I came to the conclusion that $0 saved is debt, and saving was a priority," he says.
Though he graduated with $70,000 in student loan debt, he also prioritized saving.
"I have balanced savings with debt through the power of automation, making sure I pay myself first [by setting aside money for savings first above all other bills] and pay more than the amount due each month on my debt, specifically my private student loans," he adds.
Copeman notes that he tries to keep his expenses as low as possible, particularly when it comes to housing, which, according to the Bureau of Labor Statistics, was the biggest single expenditure by American consumers in 2014 (the latest data available).
Keeping his expenses low allows Copeman to save for emergencies while also focusing on paying down debt.
Name: Claudia Pennington
Occupation: Marketing consultant, co-blogger at TwoCupHouse.com
How much she has saved: $1,800
Claudia Pennington, a marketing consultant, and her husband, Garrett, began to save for their emergency fund after looking at their situation and foreseeing additional expenses on the horizon.
"Anticipating that our car with 110,000 miles would require repairs in the future, we set up an automated transfer each month to move $100 from our checking account to a savings account designated for emergencies," Pennington says.
Pennington and her husband are focused on paying off debt, which can make saving hard, but they found a strategy that works. "Trying to find balance between saving and paying off debt was the most difficult part, which is why I love the automated transfers," she says.
Name: Chonce Maddox
Occupation: Project coordinator at a web design firm, freelance writer on the side, blogger at MyDebtEpiphany.com
How much she has saved: $5,000
Chonce Maddox was seriously focused on getting out of debt and had paid off $11,000 by the end of last year. But instead of feeling great about the progress on her debt, she hit a low point.
"I had a really bad day at work and went home in tears when I realized I was 'trapped' at my job and in my situation because I didn't have any savings," she says.
It was at that moment that she knew she had to make a change. Maddox and her husband worked together to build an emergency fund while also tackling their combined $40,000 of debt.
They made major financial changes, such as bringing lunch to work every day, not buying gifts and keeping date nights frugal.
"Debt payoff is important, but saving for the unexpected is also crucial and offers great peace of mind," Maddox says. "I was motivated by knowing that with more savings, I would never have to feel trapped again in my situation."
Name: Kate Dore
Occupation: Social media marketing specialist, blogger at CashvilleSkyline.com
How much she has saved: $18,000
After working as a concert promoter and traveling the country, Kate Dore started to feel burnt out and exhausted. She knew she couldn't leave her current job without having a savings cushion, so she began to aggressively save.
"For over a year, I slashed expenses everywhere I could -- canceling cable, increasing insurance deductibles, dropping to a cheaper cellphone plan, canceling my gym membership, cooking all meals at home and more," she says.
Ultimately, she was able to save $18,000 -- about six months' worth of expenses. Having a significant emergency fund opened up her choices and allowed her to make the changes she craved in her life and career.
"My six-month emergency fund changed my life," Dore says.
Saving for emergencies when you're young, in debt and just getting started in your career can be tough. However, not saving for emergencies can leave you worse off than before.
If you're not already saving, consider starting today, even if it's just $5 per week. Having an emergency fund can give you peace of mind and help you avoid additional debt.
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