People face different kinds of challenges every single day. Many people don’t have a plan to overcome these challenges. One of those challenges is managing finances. Sometimes, people need medical attention however their budget restrains them. Hence, they resort to self-medication which can do more harm in the long run. Calcite Credit Union encourages you to start an emergency fund as soon as you can
Why do you need an emergency fund?
Before setting aside money, know first what emergency money means. Generally, emergency money or emergency fund refers to extra money prepared for any situation that is not in your monthly budget.
These are the most common emergencies people face:
- Unexpected home accidents
- Job loss
- Car maintenance
- Unforeseen accidents or events (travel)
How to save for an emergency fund?
Anyone whose investment prevents them from accessing it instantly means it can go straight to the long-term emergency fund. This could include debit cards, checks, or taking money from a safety deposit box. Some set aside a portion of their income and put it in an online savings bank that earns a higher rate.
Some invest a portion of their income in high-quality bonds that achieve a higher return with small risks. After a few days, you can liquidate this in case you run into an emergency. A smaller amount for short-term emergency money means you deposit it in a local bank. Even though the yield may not be high, you withdraw it anytime, whenever you need it.
Ways on how to build an emergency fund
Follow these different tips in order to start saving for your emergency money.
#1 Hold a garage sale
One of the easiest ways to earn and save money, go through all of your stuff and have a garage sale at your home. People buy things that sometimes, they don’t need. In the end, it just gathers dust at your home. To get rid of all the dust and guilt of buying those unnecessary items, you may put up an online shop or garage sale on the extra things.
Avoid clinging to material things especially since you bought it. Remember, the money is out of your account and it’s time to focus on finding a solution. You can also sell your preloved stuff on eBay, Amazon, Facebook Marketplace, or even at your own garage.
#2 Find a side hustle
When people work full-time but still feel they’re not earning enough, they find some side hustles to reach their goal. Some try working at the nearest fast food restaurant or clean homes or even go into food delivery.
For creative and innovative people, you can try working freelance.. Some freelancing sites that you can browse through:
#3 Work remotely
Another option to finding a side hustle, try working full-time at home instead. Transportation adds to expensives A number of work from home opportunities include:
- Creating your own business (investing in your skills)
- Working freelance – being a virtual assistant or a content writer or engage in digital marketing
- Offer your services to your neighbors as a babysitter
- Put up an online shop on Etsy
- Start a blog
#4 Cut your groceries in half
Groceries are a necessity. Cutting your groceries in half may seem hard at first. In order to save money, you may try changing the brands you usually buy and find alternatives that offer the same quality.
Some ways to curb groceries expense:
- Only buy what’s on sale
- Check out the stockpile items – ensure they’re at their lowest price
- Reduce meat consumption
- Meal planning – like eMeals
#5 Reduce your utility expense
Utilities seem more challenging to reduce since they help with basic human needs. People need electricity for their fridge, laptops, phones, and even their speakers. When taking a bath, people need water to lather the shampoo and rinse themselves.
Aside from finding a side hustle to support the bills, paying attention to how you spend goes a long way. For example, if you spend so much on streaming subscriptions you may try finding people to share it with. This way, your bill gets split in half or even in thirds. Others reduce the amount of the time they spend in their home watching online. Instead, they spend time at a cafe and watch their series there.
#6 Refrain from dining out, eat at home instead
Sometimes, people crave certain foods that don’t have at home. In turn, people eat out more often. They also find cooking at home to take time and effort. However, if people want to save money, they need to strive to eat at home and prepare their own meals. Even grabbing a coffee from Starbucks costs more if you do it on a daily basis even just for a month. You’ll be shocked when you see the total cost by the end of the month. It covers either your electric bill or even a portion of the rent.
Starting to plan meals include a freezer cooking day that allows you to prepare meals and stock them in the freezer. Reheat the food whenever you get hungry. This saves a lot and the money can be allocated to the emergency fund.
#7 Avoid taking out of town trips
Most people take captivating photos of the places they go to during their vacations. However, some of these out of town trips cost a lot, especially if you plan on going to a tourist destination.
As an alternative, go with staycations or host a gathering at your home. Invite friends to come over and do a potluck. Let them bring food or drinks. Or, hold a garage sale on weekends instead of traveling someplace else.
Even with low income, anyone can save for an emergency fund. Calcite Credit Union shares these tips on how to save for an emergency and offers other great financial advice on our website.