How Do I Build an Emergency Fund?
Learning how to build an emergency fund is one of the most crucial and vital things that you can teach yourself. If you ever run into an unfortunate situation where you need to quickly come up with some extra money to take care of a bill or expense, a well-prepared emergency fund can help make things a lot easier on you and your finances.
When you begin building up your emergency fund, do not make your goal insanely high. By starting with a high goal, it becomes easier to feel disheartened when you realize how long it may take you to reach that goal.
Instead, make your initial goal a smaller amount like $300 to $500. If you are able to organize your budget so that you can put away $20 to $40 a week, you could reach that goal in a few months. You could get there even sooner if you are currently in a good income situation.
After you reach that initial goal, you can then set up the next goal and adjust the amount you put away each week as you deem necessary.
Ways to Build Up Funds
Perhaps you only make so much and do not have any money to spare for an emergency fund. If so, know that you are not alone. However, there are some things you can do that may help you save quite a bit of money for a rainy day.
Sell Things You Do Not Need
Almost everyone has items lying around in their attic, basement, or garage that they are not really using. You might be able to turn them into quick cash by selling them on:
- Through a yard sale
Get a Programmable Thermostat and Use It
By getting a programmable thermostat, you can lower your heating and cooling bills by a significant amount. When there is nobody home, it is wasteful to have your heat or air conditioner going. No one is around to enjoy it. By programming your thermostat to only kick on when you are going to be home, you can avoid wasting money.
Drive Your Car Less
Having to spend money on gas, repairs, and maintenance for a vehicle can cost you a lot of money over the course of a year. By switching to public transportation, biking, walking, or even carpooling, you can save a lot of the money that you would otherwise spend on the aforementioned things.
Use a Shopping List
Believe it or not, using a list when it comes to shopping can be incredibly helpful. Not only will it help you save time at the store, but you will be able to have an easier time sticking to only buying what you need.
Get a Second Job
If you have the time, energy and ability to do so, taking on a second job is another way that you could potentially build up the amount of money you need in order to have a solid start for your emergency fund.
Make Your Contributions Automatic
In the modern age, it is easier than ever to make putting money into an emergency fund completely automatic. Every time you get paid, you may be able to have a specified amount of money automatically put into that account, this way you do not get tempted to use it on something else.
You may be able to choose to make a deposit through direct deposit with your employer or having an automatic transfer from your checking account into a different account with your bank. By doing this, you can avoid having to think about putting money into your emergency fund.
That being said, just make sure that the account that you set up is not one that you can access too easily. You do not want to be tempted to draw money from it just because you find yourself a little bit short on a night out or you want to buy a new piece of clothing that you have been eyeing.