Everyone knows that it is a good idea to have an emergency fund available for those costs that sometimes pop up in life.
You can’t always predict when you are going to need to spend some money, so having an emergency fund put off to the side for just such occasions is a good idea. However, it can be very difficult to build such a fund when you are only working with a relatively low income.
So, how can you build up your fund while still making ends meet each month? Here are some tips to point you in the right direction to start an emergency fund.
Add It to Your Budget
The first thing you need to do is make this kind of saving a priority. If you don’t emphasize building up your emergency fund with at least one monthly deposit/transfer, you are never going to sufficiently pad your account.
As you are working on putting together a monthly budget, be sure to include at least a little bit for adding to your emergency fund. It would be great to add a significant amount, but even a small deposit can put you on the right track over the long run.
Pick Up Side Work
If you would like to quickly create an emergency fund, you could try to pick up work on the side as a separate income stream from your main form of employment. Think of this money as “bonus” money that is going to exclusively be put into your emergency fund.
Since you should already have a budget sorted out for your month-to-month expenses based on your standard income, you can set aside the extra money you earn through your other work for the express purpose of building the emergency account. When you have your emergency account at a sufficient level, you can either quit working extra or divert that additional income toward other bills or debt.
Cut One Bill
Even adding something like $50 per month to your emergency fund is a great way to grow it over the long run, but you might not currently have room for that in your budget. You will, however, if you can cut out one bill for a similar amount.
Look through all of your monthly bills to determine whether or not you can reasonably cut out any of them. If you find a spot you can save, take the money that is no longer being spent on that former bill and use it to grow your emergency fund.
Give Up One Habit
Do you go for an expensive coffee each morning on your way to work? Do you go out to eat multiple times per week rather than cooking at home? Think about your day-to-day habits, like the latte factor, and try to cut on out (or at least cut back) in order to free up money that can be used for an emergency fund. You might be surprised to find that you wind up feeling better about saving the money than you did about indulging yourself in your habit.
How did you start an emergency fund? Can you think of other ways to find money to put in an emergency fund?
Photo courtesy of: trenttsd