How to build a contingency fund through your freelance job?

One of the most important pieces of advice that got was from Brian Tracy. A few years back I was at a Brian Tracy conference and I learned about having a contingency fund.

To simplify things, a contingency fund is an emergency or a back up fund. This is how you prepare a contingency fund.

1. You first calculate how much cash you need on a monthly basis. You figure this out by adding up all the bills that you need to pay and make an average estimate.

2. You then multiply this number into 6 and you then have your contingency fund.

E.g. If my monthly expenditure (inclusive of your family) comes to a $1,000.00 per month, then my contingency fund is $1.000 x 6 = $6,000.

So, I need to do everything I can to make $6,000.00 and then put it aside for an emergency. This savings/emergency fund MUST NEVER BE TOUCHED. This is the security you need to have at all times as it gives you the liberty of launching out into business or quitting the job you hate and trying out for a better job.

When you have a 6 month backup contingency fund, you know that even if you get laid off from work, your family is not going to suffer because you prepared in advance.

This was one of the most important lessons I learned (Thanks Brian). I used my secondary income from my freelance writing job to start building my contingency fund.

The easiest way to build your contingency fund is to let your full time job pay your regular bills, while you work at a secondary income by finding high paid freelance writing jobs and then using that revenue to build your 6 month contingency fund.

If you cannot do a 6 month contingency fund, then I suggest you use your freelance jobs to build a 3 month contingency fund.

Tomorrow, we will look at what checklist you must go through before you quit your full time writing job?

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