28 Mar 4 Ways to Build Your Emergency Fund
Imagine that your car breaks down, the central air in your house breaks, or your child suddenly becomes injured. All of these unforeseen events can happen to anyone at anytime leaving one with unexpected expenses. So, instead of trying to quickly come up with that money and send yourself into financial ruins, why not create an emergency fund?
An emergency fund is an amount of cash that one has gradually saved up in order to cover up and assist a person with the financial surprises, or emergencies, that life has handed them. It is also a great way to avoid squeezing all of those expenses onto a credit card, generating unnecessary debt. Build your own emergency fund by following these tips below:
1. Start with a low target goal
It is unrealistic to put a large amount of money into your emergency fund right away. Therefore, it is feasible to begin with a low target goal. Even if that means saving anywhere from $25-$40 a week.
Essentially, the objective should be to start off small, yet still challenge yourself to save a good bit every week, trimming from your weekly spending. That way, you can accumulate a reachable amount in no time.
2. Choose an appropriate place to keep the fund
Your emergency account should be easily accessible, but not to the point where you are withdrawing money from it daily. It is practical to set up an online savings account separate from your normal checking account. This will differentiate your spending and splurging collection independently from your emergency collection.
Setting this fund up at a different bank, just directly online, or at a combination of different places are also helpful ways to restrain you from taking out dispensable cash.
3. Treat the fund like a monthly bill
A beneficial idea would be to to treat the emergency fund like a bill since it will technically become apart of your monthly budget and expenses. Consider setting up the emergency fund with an automatic monthly transfer like you do for a water bill or Internet bill.
Although this may feel like a forced savings at first, it will ultimately aid one to securely establish the fund. Just remember to base this all off of the initial and appropriate balanced budget you first came up with, preventing you from regularly paying your bills with the emergency fund.
4. Celebrate milestones
After a few months, you will eventually hit that first milestone, feeling accomplished and in control. After you hit that target goal of anywhere from $200-500 in three months, remember to celebrate that milestone and treat yourself with a small reward.
Essentially, if you want to keep seeing that fund grow, start planning ahead again and go about setting another target objective. By constantly pushing yourself to save more over time, you will see that building an emergency fund can be a stimulating and satisfying way of life.