The pandemic has taught many adults about the importance of knowing how to create an emergency fund.
No one knows what will happen tomorrow, but we can prepare.
According to LendingTree, one-third of Americans say they’re still in debt from borrowing money to pay for a previous crisis.
Knowing how to create an emergency fund isn’t as important as doing it.
While we will never tell you what to do, these steps have helped others save.
The ability to create an emergency savings starts with the decision to take action.
You alone can make this important decision to start saving toward a specific emergency fund goal.
Here are 5 easy steps that will help you successfully save for the next time that you’ll really need it.
- Put it aside
There are many ways to automate your savings plan.
Ask your HR department to put a percentage of your money in savings.
Some banks like Chime take a percentage of your checking and allocate it to your savings.
No matter how you choose to do it, putting money aside has never been easier.
According to Home Advisor, most homeowners on their site spend an average of $133 a month on lawn care.
An average of $133 monthly is spent on home cleaning.
That adds up to over $3,000 a year.
That’s almost $16,000 spent over the span of 5 years.
So, cutting the costs of outsourcing tasks can help homeowners save a significant amount.
If you want to learn how to create an emergency fund, this is a great step.
Plan for an extra paycheck
Biweekly employees receive an extra payday 2 months out of the year.
Consequently, putting that extra paycheck aside into your savings can be a smart savings plan.
Also, putting an additional tax withholding amount from your paycheck can help put your savings plan on autopilot.
Generally, at the end of the year, most employees receive a larger refund after doing this.
Cut something new each month
Additionally, you can turn saving money into a game.
Every month, you can find new places to cut costs.
This can help whether you are cutting monthly service costs, shoe purchases, or even just splurging on ice cream.
Stop shopping online
Indeed, shopping online can quickly turn into a bad habit.
When you are bored or lying awake in bed, it can be easy to turn to online shopping.
You might want to try to put down the phone and develop a healthy habit, instead.
This can help you save whether you choose to start drawing, running, or calling friends and family nightly.
Let’s face it.
Most of us have items laying around the house that haven’t been used in years.
Who knows, someone else might benefit from your used items more than you do.
Lost and found
Also, using sites like MissingMoney.com can help you find balances that you may have forgotten about.
These can include bonds, retirement account balances, and more.
Pack it or snack it
If you work in an office, packing your lunch can help you save money.
Bringing snacks to munch on throughout the day can also help you save towards an emergency fund.
Your waistline might also thank you.
Get a side job
Nowadays, the list of side jobs available is endless.
This can help whether you choose to work at a local retail store or restaurant, deliver meals or groceries, sow masks, pet sit, or mow the lawns on your street.
Indeed, another job might give you additional funds to save in case of an emergency.
Many budgeters have found that it helps to create a goal before they begin taking the steps to save.
Goals are very important to successfully manage finances.
After you have learned how to create an emergency fund and met your goal, then you can create different steps towards a new goal.
While no one should stop saving, the reward of meeting your savings goal might mean that you can feel comfortable taking a step or two off of your list.
Just like dieting, rewards can help provide something to look forward to and can help to avoid feeling deprived.
By now, you probably know how important it is to save for an emergency. The next step is to make the decision to take action.
*The information offered in the above post is not intended to replace the advice of a financial
consultant/financial planner. WorkPlaceCredit® disclaims any responsibility towards an individual’s personal finances. We offer these posts only as conversation starters in the field of financial literacy.
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