Perhaps you’re underpaid or you’ve splurged too much this month. While every financial struggle is different, one thing is for sure, emergencies – a broken, a flat tire, or a death in the family – can happen to anyone. Are you financially prepared for such emergencies? If no, then it’s that you start preparing yourself through starting an emergency fund. Here, we’ve listed down some ways on how you can start building an emergency fund.
- Change Your Mind-Set
You’re an adult now, so start holding yourself accountable on every decision that you’ll make. Start thinking about what ‘emergency’ really means to you. It isn’t about purchasing a new makeup palette just because you accidentally broke your old one. An emergency isn’t also about riding a cab because it’s raining. Sure, you can still spend on these things but you need to get it from your income, and not on your emergency fund.
- Sort Out Your Monthly Expenses
Before starting an emergency, you first need to figure out your fixed and variable expenditures. Fixed expenses are the things that you consistently pay every month (groceries, rent, electricity, and water bills). Variable expenses, on the other hand, are the things that you treat yourself with like your daily cup of Caramel Macchiato from Starbucks. While it’s fine to treat yourself every now and then, it’s still important that you dedicate a certain amount of your variable expenses to your emergency fund.
- Open a Separate Bank Account
One the simplest way to start your emergency fund is by setting up an account that isn’t accessible for your debit card. If possible, open an automatic transfer account from your daily account to your emergency fund so you won’t see it there. Remember: if you won’t be able to see it, you won’t feel any urge to spend it.
- Start By Saving Small Amounts
Going on a crash diet won’t give you long-term effects. The same can be said when it comes to saving money. Opting for smaller increments will make you less likely to fall off the ‘save some money’ bandwagon. It will also keep you from feeling like you’re depriving yourself of your hard-earned money.
- Grow Your Fund to a Six Months’ Worth Income
An ideal emergency fund is worth a six months’ income. While it seems a bit challenging, figuring out the right cushion for your lifestyle will help you achieve this amount. Yes, it’ll take some time, but once you’ve reached your goal amount, your life will become a lot easier.
Having an emergency fund is one of the best ways start becoming financially prepared in life. So start growing your own emergency fund now, and put these tips to work to make saving money a lot easier.