Did you know that almost three-quarters of American families have no form of savings? With consumer costs and debt rising, it is more difficult than ever to remain financially stable in the United States.
Have you ever thought about starting an emergency savings fund so that you have money in case of a surprise financial burden? Here are some tips for how to save money and build your emergency fund.
Determine Your Monthly Expenses
A good rule of thumb for emergency savings is to have six months’ worth of expenses ready to go. This is a great option for an extreme issue, like losing your job.
Although it may seem like a high amount, you can work up to this goal. Calculate how much you spend every month and multiply it by six to get your final figure.
Remember to factor in other bills that you may have in a six-month period that are not necessarily every month. Some of these include property taxes, car registration, or bi-monthly utility bills.
Save What You Can Afford
Although it may be tempting to stash away as much as possible for your emergency fund, you should save at a moderate rate. This way, you will still be able to pay your bills and treat yourself to things that you want.
Direct deposit is a fantastic method for adding to your emergency savings. You can read about direct deposit and talk to your bank about allocating a certain amount every paycheck to go into your savings account.
Do Not Increase Your Spending
Just because you put money into your emergency fund, it does not mean that you can overspend in other areas of your life. For instance, try not to increase your credit card debt or buy things that you cannot afford.
Your emergency savings should be just that and only used for emergencies. Do not dip into it when you make a purchase that is unattainable with your current income.
Work Toward Other Financial Goals
When you learn how to save money, you also need to make other goals for your finances. If you have high-interest debt, such as credit cards, then you should also work toward paying that off so you do not pay too much in excess interest.
Consider putting your emergency fund in a high-yield savings account to make your money work for you. It may not seem like a lot, but these competitive interest rates can be multiple times more than your regular bank savings account.
Establish an Emergency Savings Fund Today
If you do not have an emergency savings fund, consider starting one. With an emergency fund, you can save for a rainy day and feel more at peace if you have an unexpected expense.
Want to learn more about how to manage your finances? Check out our site for more tips and tricks when it comes to personal finance and budgeting.