An emergency fund is a great way for you to save for a rainy day. Having an emergency fund in place can offer you and your family great protection in times when you need money fast.
However, to have an emergency fund you need to plan. This is because even an emergency fund requires you to be diligent about putting away funds to make your goals a reality.
Here’s a look at how you can get started.
Look at Your Finances
You will need to take a careful look at your finances before you create your emergency fund. Look at how much you are spending now and start looking at how you can trim the fat.
You can use a budgeting app to assist you with creating your budget. The next thing you should do is decide on the goal of your emergency fund.
The most common use of an emergency fund is for a rainy day, another use for an emergency fund is to save to buy a house, a car or take a vacation. These are just ideas of emergency funds you can come up with others of your own.
Create Direct Deposit
Setting up a direct deposit to put funds into your emergency fund is one of the best ways to ensure that you are always saving.
Doing a direct deposit is just like putting a set it and forget it function on your account. This means that you set a certain amount to be deposited from your account into your emergency fund account.
This makes it easy for you to make automated payments without having to think about it every month.
Stash Away Extra Cash
Occasionally you might find yourself getting extra cash. Whenever this happens it’s a good idea to put it away in your emergency fund.
This means that you should put away that extra cash that you get for your bonus at Christmas. Stash away any cash you may get for your birthday or any other special occasion in your life. Instead of first thinking of how you can spend it, think about how you can save it.
Boost Your Income
To boost your income you need to find ways to generate extra money. You can do this by getting an extra job or by finding ways to work for yourself to earn extra money. Getting a second income can go a long way in helping with debt.
For example, if you have a skill or a talent you can use it to earn money on the side and stash it away in your emergency fund.
Get Financially Ready
Getting financially ready is important especially when you have a family. You want to make sure that you have cash put away so that if anything happens you will be prepared.
Take the time to plan out how you will put money into your emergency fund before you even start one. This way you will get off on the right track.