Practical Ways to Build Your Emergency Fund

Building your emergency funds can be difficult, especially in this tight economy, but make no mistake. It can be done, regardless of your monthly income. This is because most people spend their money unnecessarily. They spend money on products they do not need, and sometimes those products end up in the trash can, because they are not needed. You have to constantly keep in mind that it is very important to have money for rainy days. Some situations will leave you in debt if you do not have emergency funds set aside!

1. Why?

For instance, disease, sickness or tragedy can trike any time, leaving you with no other options than just borrowing money. We often find ourselves in situations that are beyond our imagination, which is why it is important to set aside emergency funds, regardless of our financial status. Tragedy chooses its victims at random, it rarely gives a warning sign. It just strikes, and it can happen to anybody.

2. How?

Your emergency funds should be easily accessible too. This means that you are able to withdraw from them whenever you need them. This could be money saved in an interest-bearing savings account, or perhaps a little bit stashed in your basement. Regardless, saving money requires discipline. Although it is daunting, it can be done little by little. You really don’t have to stash a lot of cash at once.

3. How Much?

Saving begins with knowing how much your monthly expenses are. Calculate your monthly income and deduct all your expenses for the month. Whatever is left over needs to go into your savings account. You have to know how much you spend on food, toiletries, lotion, soap, laundry detergent, tooth paste, gasoline, and pocket money. Excess funds should then be deposited into your savings account. Don’t think of money as being an immediate source to spend freely. Think of all incoming money as going into your savings. For instance, don’t spend your tax refund. About 75% of taxpayers in the United States received an average amount of $2,900 this past tax season. This can be a perfect start if deposited in an interest-bearing savings account. Ask for a direct deposit so you are not tempted to use any of it.

4. What Next?

Look for ways to cut back. Many find it easy to say that they don’t make enough money, but you must keep in mind that any amount of money will never really seem like enough if you’re intent on spending all of it. Therefore; you must be realistic. Don’t set yourself up for failure by setting unrealistic goals that you cannot follow. Start somewhere small and monitor your progress. Remember, you are in charge, because no one will be there to see what you are doing with your money.

Also, find other ways to earn extra cash from home (or consider getting a second job, even if only for a couple of months). For instance, you can write blog posts online and get paid. If you are not a writer, become a mystery shopper and make money, or you can walk your neighbor’s dogs. You have to find creative ways to earn extra cash. You can even tutor students if you are good at math, English, history, and etc. Is a bank offering a $100 bonus for new accounts? Sign up! That’s $100 in your pocket for 20 minutes of “work.”