Could you handle a financial emergency like an unexpected medical bill or the breakdown of your car? More than 50 percent of Americans surveyed said that they would have trouble coming up with $2,000 on short notice. If you are one of them, you need to take action now.
Life happens, and you never know when a financial emergency will arise. If you have a solid emergency fund in place, you will be able to handle whatever life throws at you without having your life go into a tailspin. You might think that saving a couple thousand dollars is beyond your abilities, but most people can find places to save.
Pay Yourself First
One of the most effective ways to set money aside is to treat your monthly savings as just another bill. Have a percentage of every paycheck transferred to a savings account. If you do not see the money, you will not be tempted to spend it.
If you do not think this strategy will work, try starting with a tiny percentage and building from there. You can start with as little as 5 percent of your paycheck; once you see how easy this strategy is, you can increase the percentage and continue to build your emergency fund.
Keep Fees at Bay
If you are like most people, you are wasting hundreds of dollars a year on fees you do not have to pay. You may be paying $2-3 or even more every time you withdraw cash at an ATM. Planning your cash needs more effectively, or driving to your bank, can help you avoid those fees and keep more money in your pocket.
If you are paying for a checking or savings account, simply moving to another bank or switching to a different type of account could save you hundreds of dollars a year. That is money that could be going into your emergency fund instead of filling the bank’s already overstuffed coffers.
Trim Your Entertainment Costs
You can easily spend $100 on a night out at the movies; much more if you have to pay for a babysitter. You can trim your entertainment budget by 90 percent or more by streaming your movies on Netflix instead. You may not be able to see your favorite movies on opening night, but if you can wait a couple of months you can save a lot of money. Even better, you will not have to worry about rude talkers and cellphone users – and your feet won’t stick to the floor.
You can find plenty of other cheap entertainment options, from taking a walk in the park to spending a leisurely day at the zoo. Look for special discounts and 2-for-1 deals to keep the family entertained for less and put the money you save into your emergency fund.
Clean Out Your Closet
This is a one time solution rather than an ongoing strategy, but it can be a very effective one. We all have items around the house that we no longer need. Taking the time to clean out your closets, attic and garage and selling your unwanted items can help you build your emergency fund quickly.
You might be surprised how much your unwanted items can fetch on eBay or Craigslist. Just use the sites to look up the selling prices of similar items and use that information to price your own unwanted but still usable stuff.
No matter who you are or how much money you make, you need to have an emergency fund in place. Financial experts recommend having between three and six months worth of living expenses set aside. You may not be able to save that amount overnight, but if you use the strategies outlined above you will be there before you know it.