No one expects it happen to them, but emergency situations can surprise the most careful of people at the most inconvenient of times. Sadly, many people simply aren’t financially prepared for the costs that many emergency situations can bring. Here’s where having an emergency fund makes a difference.
Peace of mind couldn’t be more important when it comes to money and having an emergency fund available is a vital form of security that shouldn’t be overlooked. Without one, you could find yourself having to take out a loan or credit card in order to pay for any unexpected costs. No matter what, you should always try to avoid taking on new debt whenever possible.
We’ve come up with some important tips to help you grow a pot of emergency cash even if you think it’s too late. If you’re having trouble with debt and don’t think now’s the right time to start yours, then Debt Busters can help. Speak with us today or take a look at our debt solutions to see how we can help you overcome your existing debt and start your emergency fund as soon as possible.
Make a budget that you can stick to
However dire you think your current financial situation is, you can start to save emergency money if you put your mind to it. The first priority you need to tend to is creating a budget. Without one, you’re simply hoping for the best in a disorganised manner. It doesn’t a take a genius to realise this isn’t the best way to go about things.
To start, work out your monthly income and deduct any outgoings. Financial obligations like car payments, credit cards, bills, and so on should be included in this calculation. What’s left should give you enough money for food and luxury items. As a rule, you need to try to save at least 10% of your monthly salary. Just remember it’s not too late if you start now; by next month you’ll already have some emergency cash to help you stay protected in bad situations.
Think about ways to cut your costs
Cutting costs from your daily living expenses and luxury items may seem like you’re about to enter the world of boring. However, cutting costs is more about being creative than it is being unnecessarily strict on yourself.
Bad habits are normally the source of overspending and keeping track of how you overspend is a great way to cut costs going forward. Monitor what you spend your money on and work out what’s honestly a waste to you. You’ll be surprised how all the little things you don’t really care about too much start to add up to the hundreds of dollars over time.
If you’re really concerned about your self-control, you need to learn how to combat it directly. Instead of transferring spare money to your savings yourself, ask your company’s payroll department to siphon off part of your monthly salary into a separate account. While it might feel like an uphill battle and that you’ve left everything too late, just focus on your end goal and the small steps that will get you there.
Think about emergency fund milestones carefully
Getting over the hardest part of your emergency fund is when you hit your first milestone. The key here is to set realistic milestones that you will be able to hit frequently throughout the month. There’s nothing worse than working towards a big number and it seemingly never getting any closer.
Have a think about what’s realistic for you each week. Maybe you should start by trying to save $10 or $20 on top of saving 10% of your salary each month. If that’s too much, simply look at your budget and work out what’s right for you. It’s not too late to start to save emergency money and protect yourself. So, please don’t give up before you’ve started.
However, milestones should normally come with a reward. Creating an emergency fund shouldn’t be seen as a punishment, no matter how late you’ve left it. Why not celebrate hitting your monthly targets by grabbing a beer, getting take away, or buying yourself a small present. You’ll feel better for doing it and reinforce your motivation to press on saving.
Deal with any debts that are slowing your progress
Debts are the number one reason why people struggle to start an emergency fund. With money coming out every month it can seem totally overwhelming to consider saving anything at all. In this situation, take a look at consolidating multiple debts into one lower monthly repayment or simply shop around for a cheaper credit card if you only have one. Getting your debt under control is vital in increasing your spending and saving power.
Whatever you think about your situation, it’s not too late to start an emergency fund and save for any upcoming rainy days. However, if you’re under pressure from debts and credit cards, Debt Busters can help. Contact our friendly team today to find out how you can take back control of your finances and be in a better position to start saving emergency cash.