Having an emergency fund is essential especially if you have a family. Being prepared for an emergency is a must, failure to do this can result in severe consequences.
Not having the finances to deal with an emergency, especially a medical one, can be devastating and stressful at the same time. By having an emergency fund in place you can alleviate all of this worry and make sure that you are prepared for anything to happen.
Here are some tips for setting up an emergency fund.
While you may have big saving goals in mind, these can leave you overwhelmed, especially if you are not able to achieve them as quickly as you would like. The better option is to break your savings into smaller bite-sized chunks.
Saving a little bit over time will eventually add up to the big saving that you have envisioned. The fact is that when you achieve your smaller goals it usually gives you the motivation you need to continue saving.
Whereas if you start with a big goal and you fail to reach it, you may become demotivated very quickly.
Automating your savings is another great way for you to ensure that you actually go through with saving money for your emergency fund.
If you are a salaried employee who gets your salary deposited into your bank account, you should have a separate account ready so that an automated withdrawal is made for your emergency savings.
If you never see the money, then you will not be able to think about it or even contemplate using it. When you have an automated amount going to your emergency fund, there’s no need for you to think about withdrawing the money, or depositing it into your emergency fund. This hands-off approach to saving is very effective.
Avoid Credit Card Debt
Credit card debts can cause your funds to deplete very quickly. When you’re trying to build up your savings it is always best to avoid spending too much on credit.
Take a close look at your current expenses and see where you can reduce them. For example, maybe you spend a lot of time eating out, if this is the case you should consider curbing this habit. It may be causing you to spend money that could go towards your emergency fund instead.
The bottom line is that there are probably areas where you can cut your spending with credit cards if you take a careful look. Remember every small amount that you save will eventually add up, so cutting down on spending in some areas will be well worth it.
Build Your Fund
Building your emergency fund is always a top priority. Having the chance to have a financial cushion available should an emergency arise will help to give you peace of mind. This is especially true if you have a family and children.
Planning out your emergency fund does not have to be difficult as long as you are strategic about it. Make sure that you are automating your savings as much as possible, cutting down on expenses, and breaking up your goals into small manageable pieces. This will help you to achieve the emergency fund of your dreams in no time.