Smart Ways To Set Up A Quick Emergency Fund
Financial stability has become more crucial now than ever, especially considering the current state of global affairs. An emergency fund to cushion you during uncertain times is one of the key foundations of a financially stable life. Experts advise setting aside three to six months’ worth of your living expenses in your emergency fund. But, if you’re already struggling financially, three to six months’ worth of expenses can add up to an intimidating number and even discourage you from saving. So, how can you create an emergency fund with ease in this case? These tips should help.
Don’t set large sums aside; start with smaller contributions
Start by creating smaller savings goals instead of setting substantial amounts aside. Chances are, you already have a lot of bills and debts on your plate, which means almost every penny counts. In this case, saving significant amounts may mean you’ll have little to live on. Many financial experts already suggest saving about 20% of your monthly income. While this may be for long-term savings, you can put your initial 20% savings into your emergency fund until you hit the three-to-six-months target, after which the rest can go into your long-term savings.
But why not save for the long-term instead, you ask? A long-term savings fund isn’t always easily accessible during an emergency, as most people put such funds into savings accounts that cannot be accessed immediately. Plus, you may get some accrued interest on such savings. On the other hand, an emergency fund should be readily available whenever you need it.
Find money to save
Beyond the 20% from your regular salary, find as many other sources of money to save. Start by finding quick but short-term ways to increase your income. For example, can you work longer hours for extra pay? Are there a few valuable things lying around you can sell? How about getting a side hustle for a couple of months? While these options may not be the most comfortable, you can take some comfort in knowing that they’re only short-term.
There are other sources of quick money you can consider. For example, you can take advantage of tax refunds and other economic windfalls to save instead of spending more. And try not to spend cash you receive as gifts – put them into your fund. Even valuable non-monetary gifts can be sold for cash (it may not be a sentimentally wise decision, but it makes financial sense).
Cut down on your spending
It’ll be tough to contribute to your emergency fund if you spend carelessly. Therefore, find ways to lower your spending by cutting back on unhealthy shopping habits. It also helps to automate your savings, ensuring that a portion goes straight into your account to reduce the temptation to spend it. You might also want to avoid opening new credit cards during this period.
If you struggle to find funds to save for emergencies, you can consider getting a quick short-term loan from lenders like Cash Train. You can sort out your immediate and temporary cash problems while you plan your savings.
Be safe out there.
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