Emergencies Happen – Here’s How to Prepare
When an unexpected expense occurs, it’s important to be financially prepared. By establishing an emergency fund, you will have money set aside to cover these overwhelming incidents. With these 5 steps you can start building an emergency fund.
- Set a Realistic Savings Goal
You should save up enough to cover three to six months’ worth of living expenses. But it is important to start small. By setting your initial savings goal at just $250 to $500 you’ll have enough to cover many small financial bumps in the road. You may also find it easier to save a set amount each week. Try setting a goal of $25 a week which will put you at $250 in just 10 weeks. Then keep building up from there.
- Open a Separate Account
If you keep your emergency fund with the rest of your money, you may be tempted to dip into it for other things. A basic Consumers Credit Union savings account is a great place to store your fund. With up to $250,000 federally insured, it is safe and secure. Your money will also accumulate interest while allowing you to access it at any time.
- Cut Back Unnecessary Spending
Start logging your monthly spending and see if you can trim any extra expenses. Pay close attention to cable, cell phone, energy, transportation, and dining bills. If you notice any trends, try cutting back. Cook more meals at home and save the leftovers, skip your morning to-go coffee, or try carpooling. It is possible to save hundreds of dollars a month by being aware of where your money goes.
- Move Your Money
Once you get paid your money gets used to pay bills. But sometimes there may be money left over. Every time there is money left at the end of a pay period, move a little bit into your emergency fund. You can also try using coupons or discounts on items you purchase regularly to save even more from each paycheck.
- Save Large Amounts of Income
Saving your tax refund can easily boost the amount of money in your emergency stash. But there are other large amounts of income that you may be forgetting to save. Raises and bonuses are also great ways to stockpile funds in your emergency account. When you receive a raise try putting the extra amount into your emergency fund for a while. For example, if your monthly checks were $3,000 before you received a raise and $3,300 after, put $300 into your account for a few months and you won’t notice much of a difference in your current spending budget.