Why You Should Have Started an Emergency Fund Yesterday, and How to Start One Today
No matter how prepared you are, no one is immune from emergencies and surprises. Many people think that they cannot afford to keep an emergency savings fund because they are on a tight budget, however, what they really can’t afford is an expensive emergency. No matter your circumstances, an emergency savings fund is imperative to financial security. After all, emergency situations can and do arise, and you may not be able to pay for them with cash if you have not planned for such events.
Simply consider the cost associated with repairing the car, paying the auto insurance deductible after an accident, paying for unexpected medical bills or repairing a broken refrigerator. Often, those who are not prepared for these situations wind up accumulating debt, and this can be detrimental to your financial future. Because emergency situations can arise at any time, it is best if you already have an emergency fund in place. However, if you have been resisting this advice, you can easily start a rainy day fund right away. Keep reading for a little advice on getting a buffer fund ready for those future surprises and avoiding future financial ruin.
Open a Savings Account
This might seem like an obvious piece of advice, but if you do not have a savings account, now is the ideal time to open one. Or, if you already have a savings account but never use it or look at it, it’s time to paying more attention. Choose a financial institution that provides you with free transfers from your checking account, and allows you with automatic drafts free of charge. Even if you already have a savings account, you may consider opening a new account if your financial institution does not provide you with these beneficial features. These features will make it easier for you to save money, so you do not want to overlook the importance of this step. Many banks have “save-as-you-go” programs that make it easy to slowly but surely put money into savings—every time you make a purchase, a fraction of that cost will automatically be transferred to your savings account. This is an easy way to save without manually moving money around.
Find Money in Your Budget
One reason many have not saved for an emergency is because they feel they lack the financial means to do so. If you have a tight budget or if you know that you have trouble sticking to a budget, you may consider making smaller, regular drafts from your checking account to your savings account. Consider if you want to save $100 per month. You may feel the pinch associated with this amount if it is a one-time draft, but you may not miss the money if you make weekly drafts of $25. Take a look at your budget and first determine how much you want to save per month, or even within a three month period. Then schedule transfers or mark your calendar for transfer days so you can stick to a strict saving schedule.
Watch Your Money Grow
Regardless of whether you can afford to save $15 per week, $50 per week or more, you will slowly but steadily watch your account balance grow. Keep in mind that you do not want to dip into this account unless necessary because it may take you weeks to catch your balance back up. Therefore, always try to stay within your budget, and avoid overspending. There might be months where your expenses are a little higher, and you can’t put money into savings. This is okay for circumstances that are beyond your control, but try not to make it a habit. Once you get in the habit of consistently saving, you’ll see your emergency fund grow and grow. Then, when a real emergency comes along, you’ll have the money necessary to get you out of a bind without completely wiping out your bank account.
One of the best steps that you can take to promote financial security and to give yourself peace of mind is to be prepared for emergency situations. You can begin funding your emergency savings account today to prepare financially for events that may occur in the future. Some people think that they will “find a way” to pay for emergencies, but luck always favors the prepared. Don’t get into financial trouble just because you failed to plan for an emergency—face surprises and disasters with confidence! The financial information for this article was provided by the professionals at Casey’s Bail Bonds in Washington.
Share this:
Category: Budget
