How to start an emergency fund
No one is certain of tomorrow, neither it’s tomorrow certain of what it has for you economically. That is why people need to prepare well for emergencies. Unfortunately, 57% of Americans lack an emergency fund. Worst still, 39% of them have no savings at all.
That lack of emergency preparedness leaves people vulnerable to financial emergencies.
But what if you find yourself in a money-tight situation? How do you build up an emergency fund when you don’t even have enough to go by? Well, the good thing is that there are ways by which you can set up an emergency fund even when you have little or nothing in cash.
Let’s explore those possible ways, shall we?
1. Make A Plan
The first step to achieve anything is to set up a goal. That goal must be clear, concise, and realistic around your total monthly net income. Know how much you spend and how much you can save. Go slow on your spending habit and avoid the temptation to dive into your emergency fund for luxury.
Look into your list and see if you can cut down on some expenses to add more to your emergency fund. After that, watch your progress and see if there is room for improvement. Use your funds only to solve the necessary needs.
2. Sell Something
Take some time to look around your house. You will be surprised at how many “non-essential” items you can sell to raise funds for your emergency needs. From dusty power tools to exercise equipment to kids toys and idle furniture, the list is sometimes endless. You can convert these items into cash. Only use what you have sold to offset an immediate emergency need.
3. Do Side Tasks
There are plenty of quick side jobs; you can do to earn extra income. The beauty of it all is that you can do this from inside and outside your home. You can write reviews, answer several online surveys, take care of pets, and guide them while their owners are away, and more. Use the money to restock your emergency funds.
4. Take A Second/Extra Job
While some of us hate the idea of committing extra hours outside our regular work hours, it is worth the sacrifice when the rainy day comes calling. One month of a second job can make an enormous difference. The money earned from your extra job can go into handling unexpected financial outcomes.
5. Cut Down On Your Budgets
If you look into your budget, you will find that there are lots of different cuts you can make. While you may not immediately notice their effect, they add up significantly to your savings. Cancel unnecessary memberships or services, clip some coupons, and turn down the thermostat to a lower degree. The outcome could cause some heads to spin. Here is how to track your expenses.
6. Buy And Pay With Cash
That is how our parents in the good old days were able to save one or two dimes a day. Cultivate the habit of buying and paying for everyday goods and services using cash. That will allow you to keep the change and continue saving for a rainy day.
7. Work Overtime
If the job you are working has room for overtime services, use them accordingly to stack up on your fund. Monitor the time you spend doing overtime and transfer the income into a market or savings account each period you receive payment. Once you get to your goal, let go of the oversight or plan for some other financial targets.
8. Build Up A Fund With Your Tax Refund
Why spend your yearly tax refund on unnecessary shopping? Instead of withholding much from your paycheck and giving the government an interest-free loan yearly, put the money into judicious use, far away in an interest-bearing account and use it for emergency purpose.
9. Save The Bonus/Raise
If ever you are fortunate to have a pay raise or a massive bonus for an excellent job correctly done or to mitigate the cost of living, add the extra money to your immediate emergency funds.
10. Tell It Out
Tell your friends and family members that you are set on a course of achieving an important financial goal. While you don’t need to disclose your financial secrets, it is still important to tell them so you can skip a few holidays, lunches and even brewing your coffee to ease on your budget and save more funds.
Remember that it isn’t always going to be easy building your emergency fund from a tight money perspective. But you can do it with the above tips. And also don’t forget to use your funds only when there are an emergency needs.