Earlier this year, CNBC reported that 56% of Americans couldn’t cover a $1,000 emergency expense with their savings. Siblings Sunem and Israel Tovar were once part of that group.
When she started her financial literacy journey, Sunem, who works in HR, was only making $20,000 a year with $42,000 in student loans, while Israel, a teacher, was making $44,000.
Since 2018, the Tovars have been keeping each other accountable for a few goals: finding higher-paying jobs with salaries of at least $60,000; paying down Sunem’s debts; and building six-figure investment portfolios.
Now, with combined investments worth over $325,000, they coach other teachers of color on how to build wealth through their business, the Dream Teacher Project.
The siblings credit their success to prioritizing their emergency funds. Experts typically recommend keeping emergency savings of three to six months of living expenses in a savings account that’s easily accessible.
Israel explained to Insider that one of things that motivated him to build an emergency savings fund was leaving a toxic workplace. Working as a queer teacher of color in a school that served low-income students of color, Israel struggled with his mental health and being able to speak his mind. Reflecting on that time, he said, “If they fire me tomorrow, I sill got my emergency fund.”
Here are five steps the Tovars took to start building their savings.
After buying a house in Nashville, Tennessee, that he could barely afford, Israel quit his teaching job that paid $44,000. He decided to move to Washington, DC, for a job that paid $65,000 a year. While in DC, he rented out his home in Nashville.
Of his move to DC, Israel told Insider, “I was living with a friend from college in the outskirts of DC, sharing a room for $350 a month. I was just determined to get my money.”
While only making $20,000 a year, Sunem started off small by putting $5 from each paycheck in her savings account.
She said, “If you can save $1 every week, then you know, that dollar is still better than zero. Once you build momentum, $5 eventually becomes $10, then $20, and over time you’ll have your emergency fund right there.”
While Israel graduated from Yale and Stanford debt-free with full-ride scholarships, he still struggled to pay his mortgage and credit cards. The siblings recommend making your monthly debt payments manageable by calling your servicers to come up with affordable payment plans. Once you feel that sense of accomplishment from paying the minimum, you’ll feel empowered to pay down your debts more aggressively over time.
“Once I was able to get my debt to a manageable amount, I was able to shift that money to my emergency fund,” said Israel. Sunem also said she got used to living only on a small portion of her paycheck, so she redirected her monthly debt payment amounts to her emergency savings fund, too.
When Israel was between jobs, he started driving for DoorDash or Instacart. When he moved to DC, he said, “I started getting all these side gigs. I was like, ‘Give me the homework center, give me after-school this and that.’ I was just determined to get my six-figure net worth and emergency fund so I can have more agency.”
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