Saturday , 4 February 2023

Easy Ways to Build Your Emergency Fund

Emergencies and unexpected expenses often happen when you least expect them and can be unsettling and frightening. Unexpected expenses can range from an emergency home or car repair to a medical emergency and loss of a job. Things can get worse if you don’t have enough cash set aside for such a surprise. Here are a few tips for building an emergency fund to ensure you have some cash at your disposal in case of an emergency expense:

If you’ve just lost your job and don’t have any money saved up, you may struggle to cover your living expenses while looking for another job. This makes you feel hopeless or even get into debt, taking a toll on your physical and mental health and that’s why it’s crucial to build an emergency fund to provide a safety net that you can fall back on when facing financial difficulties until you get back on your feet. Without any money set aside, you’re likely to take on loans from friends and family or use high-interest credit cards, driving you into debt and potentially damaging relationships with people in your life. However, if you don’t have a job and can’t make ends meet, you should consider taking advantage of Family benefits in Saskatchewan to cater to your family’s basic needs.

Here are a few tips for building an emergency fund to ensure you have some cash at your disposal in case of an emergency expense:

1. Automate Deposits

One of the best ways to increase your emergency fund is by automating your savings deposits. Scheduling automatic payments will ensure you don’t forget to deposit or spend the money on something else. The simplest way is to consider your emergency fund deposits as a bill. That way, you’ll include the payments into your budget to ensure you make the deposits at the end of every month like you usually do for your other bills.

You can set up your online banking or ask your financial institution to automate your deposits directly into your emergency fund account. This will ensure the money doesn’t sit in your checking account, and be tempted to spend it. Consistently putting even the smallest amount toward your emergency fund will, over time, help you build sufficient money for emergencies.

2. Deposit Extra Money into Your Savings Account

Instead of spending extra cash you come across, consider depositing it into your savings account to grow your emergency fund. This can include using a tax refund, rebates, workplace bonuses, or cash gifts that you receive to help you achieve your savings goal faster. However, you shouldn’t rely on this money to build your emergency fund. You can deposit a portion of every windfall to bolster your emergency fund and spend the rest on yourself. If you’ve just completed paying off your auto loan or credit card, you can continue putting the same amount toward your savings account. This way, you won’t notice any difference in your budget, but your fund will certainly grow.

3. Boost Your Income and Cut Expenses

Besides funneling each windfall you receive, you may also grow your emergency fund by increasing your income and reducing your expenses. If you cut back on expenses and boost your income, you’ll always have more cash for your savings. One of the best ways to boost your income is by getting a side hustle or a part-time job.

You can consider freelancing like copywriting, selling your photography online, or even selling products on eCommerce sites. Another easy and quick way to earn extra cash for your savings account is by completing surveys or testing websites and mobile apps. Use your budget to determine where to trim your spending, whether reviewing your subscriptions or not eating out as often.

Endnote

Building an emergency fund can help you better deal with the financial challenges you encounter in life without having to take on additional debt. Whether it’s an unexpected job loss or a medical emergency, following the tips above will ensure you have enough cash set aside to cover the unexpected cost. This will prevent you from putting those expenses onto your credit card, retirement fund or taking on additional loans. While saving an emergency fund might be challenging, it could be a lifesaver during an emergency.