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If 2020 has taught us anything, it’s that the future is unpredictable. Nobody imagined, for instance, that a coronavirus would bring the global economy to a standstill.

Even in normal times the future is unpredictable, which is why it’s important to establish an emergency savings fund that can provide a cushion in case of a financial shock, whether it’s a lost job or a trip to the ER.

Unfortunately, most Americans don’t have any emergency savings. According to a 2019 study by the Federal Reserve, roughly 4 in 10 Americans cannot come up with $400. As a result, unexpected expenses force them to rely on costly debt, such as payday lending.

The good news is that there are easy ways to create that financial cushion, even in times like these. In a recent piece in The Wall Street Journal, I described 3 strategies that can make saving for emergencies as easy and painless as possible, even for freelancers. Here’s how you can start saving now:

SAVING WINDFALLS

Research shows that it’s much easier for people to let go of money that feels like a windfall as opposed to regular income. While this makes it easier to spend windfalls (often on stuff they wouldn’t normally buy), it also makes it easier to save. Easy come, easy go.

Here are some examples of income that would be easy for freelancers to save for an emergency:

1. If you’re using Lili, you might have a bigger tax refund thanks to your ability to better identify and track your tax-deductible expenses. If so, you can save some of your refunds. You should also consider saving part of your cash payment from the Federal Government as part of the Pandemic stimulus program.
2. If you’ve had an especially good month, you could save part of that additional income. For instance, if you’re an IT person doing additional work setting up home offices, or you work for a food delivery service and have been making extra deliveries, you might want to put aside some of your additional earnings.
3. If tips are part of your income, you could save a portion of your tips. If you drive for Uber or deliver for Instacart, you might consider using your hourly wage for daily expenses and depositing your tips into an emergency fund.
4. If your gig platform pays you bi-weekly, you can save part of your paycheck during the two months a year in which you get three paychecks.

$5 A DAY

I’ve shown that people are 4 times more likely to enroll in a savings program if you ask them to save $5 a day versus $150 a month. Why is that? Because $150 a month seems like an intimidating amount – it makes us think about car payments and phone bills. In contrast, $5 a day doesn’t seem like a very large amount—we can get there by skipping a latte. For freelancers, this is a reminder that the best way to start saving is just to start, even if it’s only a small amount every day.

SAVING THE CHANGE

If you’re unable to save windfalls or struggle to remember to save on a regular basis, I’d recommend using one of the robo-saving apps like Acorns, Albert or Digit that make it easy for people to save little by little. These apps “round-up” debit and credit card transactions and deposit the “change” into a savings account. For example, a $2.50 charge at your local coffee shop would be rounded up to $3, with the extra 50 cents reserved for a rainy day. Although the change isn’t a windfall, it is similarly easy to let go of, since it feels like such a small amount. Over time, it could easily grow into a useful emergency account.

THE BENEFITS

There’s a large amount of evidence showing that financial anxiety is bad for our health. It weakens the immune system, raises our blood pressure and interferes with our sleep. Worrying about money can also make it harder for us to plan ahead and exert self-control.

Of course, one of the best ways to reduce financial anxiety is to establish an emergency savings fund (and with Lili’s Emergency Bucket you can start one with as little as $1/day!). When people have a financial cushion, they are less stressed about the future. They’re also less likely to take on expensive debt.

As a freelancer, it can be hard saving for emergencies. My hope is that, by making it a little bit easier, we can help more people get prepared for the next crisis.