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How To Build An Emergency Savings
Building an emergency savings is key to being financially stable and getting out of or staying out of debt. Whether you are living paycheck to paycheck or in debt up to your ears, you need to build your emergency saving!
I know, I’ve been there, if you are in these situations, saving is the last thing that you think you should be doing, all you have on your mind is how to get the bills paid or what in the world can you do to get out of debt.
I am here to tell you that you are wrong! When you are struggling financially, the first thing you need to do is build your emergency savings because no budget or debt reduction plan will help you when you have no money and something unexpected happens.
You never know when an emergency will happen, there is no other way to plan for it besides having the money to pay for it when it happens.
Open a dedicated emergency fund account
The first step you need to take is open a savings account that is dedicated to this emergency money. Preferably at a bank that you do not do regular business with so it is a bit more inconvenient to get to that fund for non-essential purposes, or to transfer money into you checking for silly reasons.
This money is for an emergency! You should not touch it unless it is an emergency! You should also opt out of getting a debit or ATM card for this account. The harder it is to get your hands on that money the better. Try putting your money into an online bank that offers a higher interest rate then your local bank.
Find money to fund your account
Next, go through your budget and see where you can squeeze a bit of extra cash out contribute to your emergency savings. If you can do that, you are on the right track, just an extra $20 or $50 a week will do wonders. If not, you’re going to have to make it happen. Here are a few tips…
Cut out any non-essential expenses, cancel any subscriptions or services that you are trying to pay for that are not essential, go through all your bills and bank statements and cancel anything that you don’t absolutely need.
How about making extra money by finding a side gig? Do you have a hobby or talent that can earn you a bit of money on the side? Or find ways to save money on groceries, using coupons, or using money saving apps.
Has your credit score improved in the last year or so? Maybe you can rework your vehicle or home loan with a better interest rate. What about having a garage sale or selling a few items online to help out? The options are limitless, you just need to think out of the box and take action!!
Once you have $1000
Once you’ve built your savings up to at least $1000, you can pull back a bit and start using some of the money you have been using to fund your emergency saving to start paying down debt, but keep on adding to your emergency fund.
It is best to get enough money in your emergency fund to cover at least 3 months of expenses. So keep at it, you will be so happy you did when an unexpected financial expense arises.
What ways have you used to fund your emergency savings? Please leave a comment to let us know creative way you have used.
How To Build An Emergency Savings
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