Everyone needs an emergency fund. Whether you’re a single college student, a retiree, or even have a family of your own. Everyone must have one because nobody knows when an emergency is going to hit. This is also going to be an essential component to having healthy financial well-being. It’s so important to have at least three to six months’ worth of expenses that can be covered.
Bills add up, there may be times that you can’t work, or some dire situation happens that could zap all the money you have. In general, the idea of having three to six months’ worth of expenses covered sounds unreasonable, right? It sounds as if it’s something that simply cannot be obtained. These are some tips to help you build your emergency fund.
Create small savings goals
If you want to set yourself up for success then it’s best to just go ahead and create some small goals. You can begin by saving $100 every couple of weeks. If this seems too drastic then even look by cutting out some small monthly expenses such as a subscription. You’ll eventually want to raise this goal to be higher and higher. Meaning you’ll put more money back for yourself and cut out less important things from your expenses. It’s important to build up some healthy saving habits and starting small is the first best step on this financial journey.
Think about the potential emergency expenses
Even though an emergency could hit at any moment, it’s best to be realistic with yourself and think about when an emergency could potentially happen and how you can prevent it from happening. For example, if you’re someone that pushes themselves too much at the gym, then this could eventually lead to a trip to the urgent care center. If your car is making some weird noise, then it may be a good idea to just go ahead and take it to the mechanic before it can get any worse. Catching these things and thinking about what could realistically happen will save you and could even prevent an emergency from hitting.
Avoid increasing your monthly spending
Whether you’re choosing to automate your savings or manually putting it back yourself, this shouldn’t justify you to immediately begin spending. Just because you have savings doesn’t immediately equate to financial security. It’s best to not begin increasing your monthly spending. Don’t look into purchasing luxury items you don’t need.
Don’t look into opening up a credit card, or anything else that has the power to put you in financial downfall. Instead, look into creating a monthly budget. This can include getting an app or some type of budgeting software so you know how much you’re spending regularly.
Don’t try to over save
It may sound crazy but don’t try to over save. You need money that you can easily access in case of an emergency. Yes, you should budget properly and save money but it’s so important to just also keep in mind that you need to try to avoid obsessing over how you save your money.