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.
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