10 Easy Ways to Start an Emergency Fund
The car breaks down, the furnace in your house blows, your child needs braces and you don’t have the disposable money to cover the financial consequences. It happens every day and many people are stuck paying by credit card or financing for months into the future at alarming interest rates, putting themselves further into debt.
Don’t let that scenario happen to you; prepare yourself by starting an emergency money fund now. It’s simple but also challenging. So gear yourself up to face the challenge by using these suggestions.
1. Save your tax refund: Now that tax season is here it provides you with a perfect start to your new fund. Take the refund and open an account.
2. New account: This leads to the perfect segue; open a new account that automatically deducts money from your paycheck. You won’t miss the money as it accumulates in this new account. Check out what accounts offer more benefits before opening one.
3. Save your change: This is simple enough; start saving your change in a bottle or if you want to be more daring, save all your one dollar bills too.
4. Keep paying a bill: Let’s say you’ve finished paying off your car or credit card bill, don’t stop; keep paying that bill but put it into the emergency fund. If you can’t afford the whole payment, pay in half; just keep the money flowing.
5. Over budget: As you prepare your budget (and you should have one) pad some categories with extra money, just in case. When the money is spent, take the difference and bank it.
6. Wants and Needs: Before you spend differentiate between your wants and needs. If you don’t really need something you want to buy, don’t buy it. Save the money.
7. Cut credit card spending: If you can’t pay off your credit card in full each month stop overspending. Credit card debt zaps your finances quickly. High interest rates, penalty fees for paying late – it all builds up.
8. Cut back spending in general: Along with reigning in your credit card debt start cutting back on things you don’t need like $4.00 coffee every morning. Rent movies instead of going to the movies; if you like having parties, invite guests to bring meals, snacks or drinks so you won’t be responsible for buying all the food and drinks.
9. Stop going out: Start cooking your dinner at home and pack a lunch so you don’t have to go out at work. This is a nice way to spend time with family and friends, too.
10. Quit bad habits: If you smoke now might be a good time to think about quitting or at least cutting back. It could save you a bunch of money. The same goes with overspending on alcohol and even soft drinks. Consumers waste hundreds of dollars each year on soda, caffeine-laden drinks and bottled water.
Take on the challenge and start your emergency fund soon. If you use discipline and common sense, you’ll begin to gather the money necessary to take on the unexpected expenses that happen to people every day.