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Life is full of surprises that’s why having an emergency fund is essential in one’s personal finances. You may not be prepared for an illness, job loss, car repairs and such but you can always prepare to handle the costs and navigate through these unexpected circumstances.
I’m sure you all know how critical this financial advice is but the problem is how to actually build a fund and where to begin, especially when you’re already struggling with your current financial situation.
To help you get started, here are 6 ways to grow your emergency fund:
1. Set a goal, have a plan and monitor your progress.
Everything starts with a goal in mind and a goal without a plan is simply wishful thinking. If you want to build an emergency fund, you need to have a vision and a plan on what to do to achieve success. Set a realistic goal amount, think of a plan on how you can achieve that and track your progress.
2. Start small.
You don’t have to start with a huge amount or a big salary to build an emergency fund. It’s okay to start with a small amount as long as you work your way up consistently.
3. Reduce your expenses.
This comes with your plan. Review your regular expenses and decide on where you can cut back – unnecessary subscriptions, gourmet coffee, movie dates, etc. Think of your goal to motivate yourself to reduce your spending and save money instead.
4. Look for other ways to generate extra cash.
What better way to grow your emergency fund than a second source of income. Whether it’s a second job, freelance work, side business or selling pre-loved belongings, this is a very helpful strategy to generate more money for your budget and savings.
5. Treat your emergency fund as a bill.
Just like the bills that you pay every month, the money that you set aside for your emergency fund should be non-negotiable too.
6. Save your tax refund.
To give your emergency fund a head start, use your tax refund to jumpstart your savings instead of using it for big purchases such as a new gadget or vacation.
The key isn’t how much salary you have, it’s all about discipline and being consistent with growing your emergency fund. Think about your future – that’s enough reason to motivate you to work on your personal finances.
Don’t procrastinate and make excuses, start now.
