Saving an emergency fund will enable you to handle expected expenses such as a job loss that might lead to financial ruin.
Saving an emergency fund by following these tips:
1. Set a specific goal such as to save enough to cover 4 to 7 months’ worth of expenses.
You don’t have to replace your entire income; just enough to cover expenses.
Remember in an emergency situation you will not be going on expensive vacations, purchasing fancy new clothes or other luxuries;
2. Set up a separate savings account into which you will deposit a fixed amount each payday;
3. An emergency fund is for the unexpected.
For example, appliances that stop working, getting laid off from work, a long illness or an accident.
It is not for things such as annual insurance costs or annual property taxes;
4. It’s alright to start small. Even saving $50.00 a month will grow to $600.00 in a year.
If you get a tax refund put it into your emergency fund. The same thing applies to a raise;
5. You can generate additional funds by doing the following:
a. Get a second job. You can handle this by keeping in mind that it is temporary.
b. Sell some of your assets. Have a garage sale.
c. Brown bag it, for lunch, instead of eating out. If you’re spending $10.00 for lunch each day you can take your lunch from home at a probable cost of $2.00. The $8.00 a day in savings will grow to $2,000 by the year’s end. Do you enjoy expensive coffees every day? There are savings to be had there too.
d. Car pool to work instead of driving your own car.
e. Stop smoking. Face it, you have tried to quit before. This time do it for good.
f. Get a piggy bank. Each night put all your spare change into the piggy bank.