Are You Flying Without a Net? Nine Ways to Boost Your Emergency Savings
The past year has taught us that we have to be as prepared as possible for the unexpected. While we all have future savings goals, having an emergency fund to support present, unaccounted needs (like a car breakdown, dental bill, or even a last-minute fun treat) should be a top priority. If you do not have emergency savings, you are flying without a net. Without emergency savings, even a small setback could send you on a downhill spiral, one that could set your finances back and make daily life even more difficult.
Experts agree that workers should put away three to six months in living expenses, yet few people have saved that much. If your finances are lacking, you need a plan to catch up. Here are nine ways to boost your emergency savings quickly.
1. Bank your change. Your spare change can be the key to a more robust emergency stash. Just empty your pockets every time you come home, then deposit that loose change when the jar fills up.
2. Split your paycheck. Diverting a portion of your paycheck to a savings account is a great way to build an emergency fund quickly. This forced savings also forces you to live on less than you make, a financial discipline that will serve you well later.
3. Negotiate your monthly bills. You may not be able to negotiate a lower rent with the landlord, but you have more bargaining power than you think. From the cable company to your internet service provider, you may be able to negotiate a better rate and pocket the savings.
4. Trim your budget by 10%. Implementing a 10% across-the-board cut in spending can help you build your emergency fund and provide additional fiscal discipline.
5. Invest your tax refund. If you are in line for a big tax refund, use that cash to boost your emergency savings and give yourself peace of mind. Instead of spending your yearly windfall, turn it into a lasting investment in your future.
6. Get a side hustle. Increasing your income is a great way to build your emergency reserves, so look for a suitable side hustle. There are more ways to earn extra cash than ever before, and the money you earn will go a long way toward solving any financial shortfall.
7. Find a better savings interest rate. You work hard for your money, and your money should return the favor. If you are stuck in a low or no interest savings account, seeking a higher interest rate can help you boost your emergency reserves that much faster.
8. Set a weekly and monthly savings goal. If you do not know where you are going, you are unlikely to get there. If you want to build up your emergency savings, set a weekly and a monthly goal. Be sure to track your progress to make sure you stay on track.
9. Keep your emergency cash as inaccessible as possible. Having extra money around can be tempting, so make your emergency fund off-limits. Stashing the cash in a separate account, or a different financial institution, is a great way to reduce temptation.
Financial experts recommend that all workers have at least three to six months worth of living expenses tucked away, but doing it can be a real struggle. If your emergency fund could use some help, the nine tips listed above can help you get started.