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Ways To Build Your Emergency Fund

Life has a way of throwing you for a loop. When you least expect it, something goes wrong that requires cash you don’t have of your own to resolve. The furnace finally gives out, your car battery dies, you get sick or injured and have to take off from work for a while, the energy bill comes with a shutoff notice, or the kids need money for a class trip or school-related expense. When this happens and you don’t have the funds on your own, you have no choice but to ruin your budget or put yourself in serious debt. 

You Need an Emergency Fund

An emergency fund is a savings account in which you deposit funds in to use for rainy days or unforeseen circumstances like those discussed above. It’s a financial cushion that, if managed well, can get you out of a lot of jams and eliminate the need to go into debt. 

What if You Need Funds Now? 

Of course, if you’re dealing with an emergency at the moment, there are immediate solutions to help you out of a jam like applying for quick loans online. You could have several hundred dollars deposited into your checking or savings account in just a few days. You can then use the funds to cover your emergency and then repay it in smaller installments over a period not to exceed a year. 

Now It’s Time to Build

After utilizing resources like a short-term loan to get yourself out of the jam it’s time to build an emergency fund. While there are different opinions on how much you should have in your account, saving anywhere from $1,000 to 6 months’ worth of expenses will suffice. Though you may be wondering where you’ll find the money to fund your savings account, there are plenty of ideas to consider. Below, are a few suggestions on how to build your emergency fund. 

  • Cut Back on Expenses – Start by looking at your household budget and evaluating your spending habits. You may find that there are things you can cut back on to increase the amount of money you can dedicate to saving. You can disconnect your cable services, downgrade your mobile phone plans, start preparing meals at home and finding free and cheap ways to stay entertained. 
  • Knock Out Debt – Debt takes a huge chunk out of the family finances. You can increase the amount of money you have to save by lowering your debt load. Use any extra money you have to pay down your debts. There are many methods you can use to pay down debt, but the snowball method happens to be one of the easiest. Essentially, you list all your debts in order from smallest to largest. Start paying off the small amounts and then use the money you were dedicated to the smaller debts to pay down the big ones. You can also contact service providers to see if they will negotiate lower interest rates or a settlement amount. 
  • Sell Your Belongings – Every house has a ton of items in it that are in good condition but are not in use. Whether its clothes, shoes, kid’s toys, books, jewelry, or old furniture, you can sell it online or at a yard sale and earn extra cash. All the proceeds from your sells can go into your savings account. 
  • Earn Extra Cash – Another option to build your emergency fund is to bring more cash into the home. While you may not have the time or resources to take on another traditional full or part-time job, there are a lot of opportunities to earn money in your spare time. You can start a blog, answer surveys, walk dogs, tutor, design websites, manage social media accounts, and so much more. The best part is, any of these opportunities can be started with next to no upfront costs so everything you make is a true profit. 
  • Choose the Right Savings Account – To be quite honest you don’t have to do much to boost your emergency fund. That is if you’ve chosen the right savings account. Some banks will offer account holders incentives and high-interest rates to earn their business. Some will match your deposit up to a certain amount, others will offer you higher interest rates so that your money is multiplying at a faster rate. 

You never know what life has in store for you, so it is best to try and be prepared for anything. Emergency funds make it possible for you to handle unexpected expenses without missing a beat on your regular financial responsibilities. If you don’t already have one, it’s okay to utilize resources like short-term loans to handle the matter, just be sure to start building your savings so that you’re prepared for the next mishap should it arise. 

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