As people grow and become more aware of the world, they sometimes learn lessons the hard way. Life is unexpected, so anything can happen to anyone at any moment without notice. People fall ill, cars break down, and houses flood whether people are prepared or not.
After something unfortunate has happened, it is very likely that you will need money to pick up the pieces and start to build again. The problem with this is you may not have the money needed to get your life back on track. Ideally, people should have an emergency fund they can dip into when they need a little help financially, but most people don't because they may not have even thought about it or have no idea how to build one.
Here are 10 tips for building an emergency fund.
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Saving money is so much easier when you set a goal. Emergency funds can be however much you want, but you should want to have a minimum amount in this fund at all times. This amount will be your goal, and you should do what you can to ensure that your fund does not drop below this amount.
It may be tempting to set a lofty goal of saving $20,000, but you want to be realistic about things when it comes to your emergency fund. You want to think and start small, setting a goal of something that is attainable and possible. Instead of aiming for something high, aim low. A goal of $2,000 is small, but depending on what you will use the funds to cover, it may be enough to keep you from having to spend more money. You will also be able to reach this goal a lot faster than you would if it too were high.
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Gym memberships are not necessary, even if you use them on a weekly basis. There are a variety of workouts that people can do in the comfort of their own home that will save them money and time instead of them traveling to the gym three to four times a week.
Check out these 5 Best Places to Work Out on a Budget if you want to get fit while saving money!
People pay bills on a monthly basis, so you can treat your emergency fund as if it is a bill and put a certain amount in every week or every month. If possible, set up an automatic transfer, so that you don't even need to be actively thinking about putting money away or stressing over whether or not your emergency fund is where it needs to be.
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It is very easy to dismiss the change you see on the ground or the pennies you find at the bottom of your purse or on the floor of the car, but it adds up. Think back to how many times you passed up a penny lying on the sidewalk or dropped a quarter and didn't bother to pick it up. It all probably equals no less than $50. That $50 could have brought you closer to your goal amount for your emergency fund.
If possible, work more hours at work or get a second job to help you bring home more money. Whatever you earn that is over the regular amount that you bring home every week or month can be added to your emergency fund. Even if it is only an extra $20 a week, something is better than nothing.
Source: The Wall Street Journal
Once your fund starts to increase, you may get excited seeing all of this money in your account. You may even be tempted to spend it on things you don't need. This is your emergency fund and it is not meant to be spent on arbitrary items. Keep this in mind when you want to spend, spend, spend. Be frugal and only purchase the items you need and avoid the ones you don't.
Driving a car and using public transportation cost money. Don't hesitate to pull that bike of yours out of the basement or garage and pedal to your destination. Not only will you be able to save a significant amount on gas, you will also be healthier, too.
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If the weather is nice and you have some free-time on a Saturday or Sunday morning, having a rummage sale would be a wise decision. You can rid yourself of unwanted items, declutter your home, and make some cash to add to your emergency fund.
Everyone knows the consequences of paying your bills after its due date: late fees. This is money that is basically wasted, especially if you are capable of paying all of your bills in a timely manner. If need be, pay half of your bill when you first receive it and the other half by the due date. This way, you won't feel overwhelmed by bills and you can ensure that they are all paid by their due dates.
When you have money, an emergency fund may not seem as important, but it can actually help anyone who doesn't want to dip into their fund for everyday spending. Having an emergency fund isn't just wise, it is necessary if you want to avoid being broke after disaster strikes. No matter how much money you make, it can be done, so there is no excuse as to why you can't start saving today.