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You may remember being a child and your parents stating that they needed to have an emergency fund. Maybe it’s something that you’ve thought about having after going through the job losses of 2020. Whatever your motivation may be, setting up a safety net can see you through any kind of financial crisis that comes your way. Here are some things you can do to set up an emergency fund:
Say that you have a car accident and have to wait for collision estimating software to get your car into the shop and rent a vehicle. Maybe you have a medical emergency and are out of work for a minute. When unexpected situations happen, we may not always be ready for them financially.
This can result in sticky situations that can seem a bit hard to get out of. With an emergency fund in place, your savings can help you get by as you navigate the unexpected.
When things like pandemics or accidents happen, the last thing you have the energy to think about is making ends meet. From trying to stay healthy to getting over the trauma of something unexpected and difficult, you may end up in a situation where your focus has to be on getting through a difficult time.
Having an emergency fund can take a huge weight off your shoulders when dealing with tough situations. Instead of having to deal with the challenge while also trying to stay practical, your savings can help you manage getting back on track and healing.
An emergency fund doesn’t always have to be used for emergencies. It can also be useful for those moments when you want to make an extra purchase that may not typically be in your budget but is important, such as a down payment when you’re looking for a home loan. It can also help with things like moves, where added costs can make your pocketbook feel a bit empty.
Yes, you want to keep a large amount in your emergency fund for emergencies, but in some cases, you may find that the extra money can come in handy for things that may be necessities.
If you’re reading reasons to save but aren’t quite sure how to go about it, it’s time to sit down and make a budget. Through budgeting, you can see how you can spend less on a regular basis and set aside more money for the things that you want to save for, like an emergency fund.
When you track your expenses, you can have a better view of what you’re doing with your money. You may discover that you’ve been overspending, and as you start to cut back on expenses, you may find that it’s easier to build up your savings.
If you really want to see your savings grow, you have to be faithful to saving. Automating your savings allows you to easily build up the habit.
Opening a savings account that keeps your money in your savings makes it more probable that you’ll leave money where it belongs. Investing your money can help you make sure that you aren’t just letting it stagnate. Growing your money through proper investing can make a world of difference for your financial stability. Ask a financial advisor for advice when you want to be sure to make the best investment decisions.
It may take a while to start building up your savings, but through careful planning, you can make sure to have an emergency fund in place for the unexpected. Knowing that there’s money that can get you through difficult times can make a world of difference for you. Start saving up today!
Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.