It happens out of the blue… you are hit with a sudden emergency problem that requires you to spend money you can’t really afford. Of course, this kind of misfortune always happens when you least expect, and at the wrong moment. You’re up to your neck in debt as it is, but now you have to find some way to pay for this urgent issue that’s come up. You check your bank account and realize that it’s running on fumes. In fact, you pretty much live paycheck to paycheck and don’t have enough to cover this unfortunate expense. It’s times like these that you wished you had listened to that famous financial advisor on TV that recommended setting up an emergency fund.
You know it’s sound advice, but you didn’t do it because you thought that things were going so good that there was no need for one. Or, you thought you didn’t have enough money to spare to be able to set aside some for rainy days.
Okay, but now that the rain has come, you don’t have any cash reserves to turn to that can bail you out of this mess. So, this leaves you with only one option – you’ve got to borrow the money from family, friends or the local bank. This means you’ll be going into further debt, which puts you deeper into the financial hole.
In spite of what you may have thought previously about emergency funds, you can absolutely find money for this no matter what your current budget is by following these simple steps:
Start Out Small
While financial experts agree that you should have at least six months of savings stashed away, you don’t have to put away large sums to get started. Take the small steps approach instead and find $10, $20, $30, $40 or $50 to save every week, every two weeks or even every month. It’s okay if you need to start with modest amounts.
Open An Emergency Fund Savings Account
Go to your bank and open up a savings account that is only for your emergency fund. It helps to keep this money separate from your other accounts and away from the temptation to spend it. Drop a few bucks in to get the ball rolling. Do not touch this account for anything except real emergencies. You know, things like car repair, home repairs, doctor and vet emergency care, sudden job loss, etc.
Set a Modest Savings Goal
To prevent you from feeling overwhelmed by the idea of saving a huge sum of money, set a more modest savings goal of $1,000. This is a target that most people can hit. Give yourself plenty of time to reach this goal. When you do, you’ll have a great feeling of accomplishment. Increase the amount as you go along.
This Money is Like a Bill
Putting money into your emergency fund shouldn’t be thought of as an unpleasant chore. Just think of it the same way you do your other bills. It’s a bill that you pay regularly to ensure your financial stability. It’s pretty similar to insurance payments.
Use Coupon Savings
Do you use coupons at the store in order to keep more money in your monthly budget? Okay, then you can use some of those savings for your emergency fund.
Use Bonuses, Cash Gifts and Refunds
Anytime you get a bonus from work, cash gifts during birthdays and holidays and tax refund checks, don’t spend a dime of it on other things before putting a portion into your emergency fund first.
Reduce Entertainment Expenses
Cut down on cable channels or get rid of cable altogether (you can watch TV shows online). Cancel that gym membership you don’t use. Rent movies or stream them online instead of going out to the movie theatre. Enjoy your vacation at spots closer to home. Find cheaper ways to entertain yourself at home.
Collect That Spare Change
Spare coins and dollar bills tend to accumulate and take up room in wallets and change purses. Periodically clean these out and collect spare change in a jar and put dollar bills into an envelope. When the jar fills up, put the change into coin rolls. Take the bills and coins to the bank and deposit into your emergency fund.
Give Yourself a Tip
When you have a nice meal at a restaurant you commonly tip the person who waits on you. Here’s an opportunity to tip yourself for doing something good. Determine the amount you are going to tip: $0.50, $1, $5, etc. Every time you do something positive for yourself, your family, friends, pets, home or community, place that amount inside a tip jar.
Set it up with your employer or bank to have funds automatically deducted from your paycheck, investment account or checking account. Funds can be transferred on a regular date of your choosing and automatically go into your emergency fund. You won’t even see this money and your fund will steadily grow larger.