Build Your Emergency Fund ASAP With These Tips
Hello everybody, I am Samuel Balaoro, and welcome to The BE Mindset Group. In 2020, we all learned the importance of having a back-up plan. The pandemic transformed our lives from orderly and predictable to uncertain and irregular. More than ever, people were struggling to find a way to keep going despite the many financial challenges life kept serving up: unemployment, cut hours, cut paychecks, and more. If you had an emergency fund, you likely spent almost all of it trying to get through this past year. And if you didn’t, you’re probably thinking it’s about time to start one.
What Is An Emergency Fund?
Emergency funds are overlooked parts of your financial plan that are actually integral to promoting your financial health and happiness. Many people see emergency funds as a boring or impossible saving tool. You’re thinking, “How can I just leave extra money sitting there when it could be used to pay down debt, buy immediate needs, or throw it in my 401k?”. Emergency funds are designed to be there for particular emergencies: those times when no other financial relief is available, and you’re entirely on your own.
Rainy day funds are another name for emergency funds. You are saving these funds for a time when you really need them but can’t anticipate coming. This is the hardest part for people to understand when it comes to emergency funds. The idea of intentionally saving for emergencies often requires a good definition of an emergency. It’s one that won’t fluctuate based on your mood and your needs. If you’ve been unemployed or are trying to fund a last-minute car or home repair, then you need an emergency fund. They can support emergency medical bills and can cover lost wages in the event of an accident requiring time off. Emergency funds should cover all your expenses for at least a few months in the event of an emergency.
Why Build an Emergency Fund?
Building up an emergency fund is hard for many people to begin. Saving is not a common practice for many of us. We’re taught to spend: every dollar should be spent or invested in a higher-end version of products or services we already receive. Reversing these long-coached beliefs and working on developing your own emergency fund as quickly as possible is extremely important in developing and protecting your own emergent financial safety net. If you’re anticipating some change in the future, it might be a good idea to start building up your emergency fund fast. It can `help carry you through the good and hard times.
Tips to Build Up Your Emergency Fund
1. Cut Costs
First, one of the ways to ensure a robust and frequently growing emergency fund is to cut costs. Take a look at your monthly expenses. What can you condense, cut, or minimize? Do you really need cable and streaming services? Is there a better deal on your phone bill if you choose a plan that hosts different streaming networks in addition to your carrier plan? Can you downgrade your car insurance to save a few hundred dollars a month? By streamlining your expenses every month you can begin to build up enough money to be invested into an emergency fund.
2. Plan Automatic Withdrawals to Your Emergency Fund
Automatic withdrawals are perhaps some of the best, most top-tier technological innovations available in today’s financial world. With automatic withdrawals, you can designate a percentage of every paycheck to your emergency fund every month automatically. That money gets taken out before you ever have the chance to spend it. You’ll never be tempted to try and redirect that money somewhere else.
3. Sell Off Unused Items
Do you have a lot of old collectibles you never use anymore? Maybe a television you’re holding onto as a backup, or a pair of high-end shoes you never wear? Selling items you don’t wear or use is a great way to provide your emergency fund with an immediate boost. These one-time cash infusions can help build up your emergency fund very quickly, providing emergency support when you need it the most.
4. Pick Up Some Extra Work
Freelance opportunities abound for people who are looking to pick up a few extra dollars here and there while still maximizing their emergency fund balance. Check local job opportunity boards for one-time positions like moving assistance or mowing lawns. The more odds and ends jobs you can pick up, the quicker your emergency fund will grow!
5. Cut Back on Dining Out
Dining out is a huge expense for many people’s budgets. Whether it’s fast food, a local pizza, or a casual sit down restaurant, the more times you dine out or pick up fast food, the quicker your budget is draining. Tell yourself you’re going to cut out dining out for just a month. Then put all of that extra money into your emergency fund. It’ll be a surprise to see how much is in there!
6. Switch to Better Bank Accounts
Some banks offer special accounts and services that can help you get better interest rates on your savings without you doing any work at all. Switching over your accounts is a great way to put even more money into your account while doing absolutely nothing! Chime Bank offers automatic savings with an annual rate of 0.50% APY, making them a top option for earning money without lifting a finger.
If you act fast, when you sign up through our link, you’ll also receive $75 free after depositing $200 or more within 45 days of opening your account. Not only will you have the automatic savings, but you can have your paycheck delivered straight to you for up to 2 days in advance. Best of all, there are no fees! So sign up to get your free $75 before this promo ends January 31, 2021.
Your emergency fund should be enough to help you get through three to six months of basic expenses. If you pay rent, that might mean tucking away three to six months of rent. If you pay a mortgage, that means totaling up your mortgage payments and having those ready just in case. The more you can pad your emergency fund with, the more prepared you’ll be for emergencies that come when no one is ready.
Thank you for spending time with us today. If you’ve reached this far, then share with us which of these points will you try in the comments below. We love to read what you are doing and how you are changing your life for the better. And if you haven’t already, please subscribe to our newsletter, where we talk about everything personal development and finance related in bite-sized pieces to make your week special. This is The BE Mindset Group, and always remember to be alive, be happy, be free, be you.