Life is full of surprises. Some are nice, for sure: but most are not. And if that nasty surprise ends up costing you money, it can have a significant impact on your finances, unless you have a large buffer to rely on when things go awry.
Weve spoken of the importance of building an emergency fund before on this blog, and how you should aim to save for at least six months worth of your ordinary income. But many households dont think they can manage anywhere near that level of savings.
If that sounds familiar, you might be surprised at what you can do – even on the tightest of budgets. In todays guide, were going to go through some super sharp tactics for building a robust emergency fund to ensure your family has the financial protection it needs. Lets get started with some of the basics.
Set a small base level
First of all, if you start out thinking you need to raise a small fortune, its going to be a lot harder to start – and continue. The chances are you will quit the process, as the end target is just too enormous to seem realistic. So, set a low base level that doesnt look too much – $500 – 1,000, perhaps. Then its a case of working out how much money you will need to put away each month within a specific timeframe. Once you have that figure, start saving it straight away.
Cut your expenses
Now you have a minimum, affordable amount that you can put away without affecting your lifestyle. Easy, right? Now lets take things to the next level. The idea here is to cut as many expenses as possible – and its a lot easier than you might think. Start with switching your utility companies – many households can save hundreds of dollars a year just by switching. Ask for a reduction on your credit card rates, too. Creditors arent averse to helping you out if you can give them a good enough story. Look at your insurance payments, too – is there anything you can cut? And are there any insurance payments on your bank account that you arent using any more? Consider changing the way you buy groceries as well – many households can save four-figure sums just by switching to cheaper brands.
Earn some extra cash
Its possible to make extra money in a multitude of ways these days. According to surveyssay, there are plenty of services out there that pay you to take surveys, for example. Maybe you could have a yard sale, or start selling things on eBay, too. Could you put in some extra hours at work, or even get a second job that doesnt completely wipe you out?
Ditch the fuel
Could you set up a carpool for your trips to work? Or maybe start using public transport instead of driving? If so, you can save a small fortune in gasoline costs, given the average American spends around $3,000 every year on car fuel.
Put it all in
OK, so now lets go back to that $50 a month you can save, and add everything else to that total. Its conceivable that you could save double, triple, or quadruple that amount if you follow all of these tips – perhaps even more. And all of a sudden, that six months worth of income doesnt sound so impossible does it?