Tips On Building An Emergency Fund
An emergency fund is money that is set aside to cover unexpected expenses. This includes things such as emergency room bills, car repairs, home appliance repairs and unemployment. Experts recommend having at least one year's worth of expenses in your emergency fund.
It may seem impossible to reach that amount. However, there are some simple steps that you can take to build an emergency fund.
Set a Monthly Savings Goal
One of the keys to building an emergency fund is to set a goal. If you want to have a certain amount of money saved by the end of the year, then you will have to save each month. That is why you will need to set a monthly savings goal. One way that you can build your emergency fund is by setting up automatic transfers each month.
Collect Spare Change
The change that you get may seem like it is insignificant. However, it can grow over time. That is why you should get into the habit of saving all of the spare change that you get.
Make Transfers Whenever You Can
You do not want to only make transfers from your checking account to your savings account once a month. You should try to make transfers whenever you can. Any time that you have extra money in your checking account, you should transfer it to your savings account.
Eat at Home
Many of us spend hundreds of dollars each month eating out. The average restaurant meal cost about $12. If you eat at home, then you can save a lot of money. For example, you eat five meals at home each week. This will help you save $60 a week. You can save $240 every month.
Bring in Extra Income
You can quickly build your savings if you have extra money coming in. There are several ways that you can supplement your income. For example, you can get a part-time job. You can also drive for Lyft or Uber. Additionally, you can use your skills to bring in extra money.
For example, if you are a talented writer, then you can write articles in your spare time. You can sell your artwork if you like to paint.
Save Your Tax Refund
Tax season is the time of the year that many people look forward to. Many people will spend their entire tax refund as soon as they get it. You should save your entire tax refund. It takes a lot of sacrifice to budget responsibly. However, you will reap the benefits in the long run.
Trim Your Expenses
You should try to trim your expenses as much as possible. You can trim your expenses by looking for a cheaper internet provider. You can also get rid of the cable and switch to Netflix or Hulu. You can save money on transportation by carpooling or using public transit.
Additionally, you should try to eliminate small daily purchases. A cup of coffee may not cost a lot of money. However, if you make your own at home, then you will be surprised to see how much money you can save. For example, you normally order a $4 cup of coffee every day. You cut out this cup of coffee. You can save nearly $120 every month.
Repair Your Credit
If your credit score is low, then now is the time to repair it. It is harder for you to get a loan or a credit card if you have a low credit score. You also have to pay more in interest.
Sell Your Stuff
You can build your savings quickly if you sell your belongings. The items that you have in your home may be worth a lot of money. Electronics, artwork, gift cards and baby items are some of the things that you can sell.
Pay Yourself First
Many people will pay their bills as soon as they get their paycheck. They will then put something in their savings account if they have anything left over. However, it is best for you to pay yourself first. You should try to save at least 10 percent of your check. If you are making $3,000 a month, then you should save at least $300.