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How to Build an Emergency Fund

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How to Build an Emergency Fund

Everyone knows the importance of setting some money aside for emergencies. It has been ingrained in us ever since we learned how to count. And rightly so. In this life, nothing can give you peace of mind as having a sizable pile of cash stashed away for those proverbial rainy days. You may have found it daunting to put an emergency fund in place, maybe because you are steeped in debt. Or you probably have tried making savings a New Year resolution year after year and found it wasn’t for you.

Look, it is not the easiest of tasks, especially if you are on a tight budget. But anyone can make it work if they put their mind to it. Because it is all about making baby steps, not building it in one fell swoop. With these 5 tips on how to build an emergency fund, you will ultimately realize that building an emergency fund isn’t really what it is made out to be.

Make it a Priority

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The first secret to savings is to put some money aside first and not to wait and see how much you have left over. If you follow that second route, you will never have enough left over. Treat it like you do your monthly expenses, paying without fail, and you might be surprised what difference a year makes. Building an emergency fund is like working for your first million: the first is always the hardest. Once you hit that target, you will be on a home run baby.

Set up the Fund and Forget about it

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One of the best ways to build an emergency fund is to set up an automatic funds transfer from your checking to your savings account. Each month, the amount you have specified for deduction will be automatically debited into your savings account without excuses. And slowly, slowly, it begins to pile up.

Sell something

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The money you put into savings doesn’t have to come from your income all the time. Look around the house and see what can be sold. You might actually be amazed by the amount of items that can be converted into cash – kids toys, old furniture lying idle, dusty power tools, old bikes, exercise equipment you name it. This might turn out to be a great fund booster, and just the kick you needed to start saving proper. Plus, it will help declutter the house, and out with it, the old energies. Talk about a fresh start, in every literal sense of the phrase.

Make Cuts in your Budget

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You saw it coming, didn’t you? Free up some extra cash by going through your budget and weeding out those small extras. Cut down on the thrice-a-week eat-outs, cancel the hundreds of cable channels you barely watch (there are cheaper alternatives now), clip some coupons, you know… These things are always there, and while you may never notice them individually, they add up significantly.

Find One-time Income Opportunities

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There are many opportunities to earn a quick buck, whether it is online or out there – paid surveys, nanny jobs, pet caring, focus groups and more. Why not earn some extra cash during your downtime? You can then direct these extra finances to your emergency fund.

Nobody said building an emergency fund was easy. But with these straightforward tips, there is no reason why anyone shouldn’t do it. It’s just a matter of making a personal decision, that’s all there is to it.

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