Life, by its very nature, is unpredictable and ever-changing. You want something, plan for it and often end up with something completely different. While an acceptance of the inevitability of life is crucial to the protean mindset, it is meaningless if you do not prepare yourself for the rainy day.
So, if you do fear the unknown like everyone else, building an emergency savings fund is the way to go. In fact, saving for emergencies offers you a safety net to turn major crises into just slight inconveniences.
For example, incidents like a car wreck or your HVAC breaking down in the dead of winter can derail your financial stability a great deal. And while nothing in the world can really give you a heads up for such emergencies, having some savings can take the financial sting out of them.
Build Emergency Fund Through Impulse Saving Using these tips
Here are some of the best ways to build an emergency fund to cover the expenses of unanticipated circumstances!
Determine How Much You Should Save
The size of your emergency fund depends on your lifestyle, expenses, and financial situation. But a good rule of thumb is to save an amount that is equal to at least three to six months of your expenses.
The idea might seem daunting when you look at the amount as a whole but putting aside a small amount each week or month can help you reach the goal within a few months. Once you have reached that goal, you can also go on to save more, depending on your expenses and income.
Save Before Spending
One of the best ways to build an emergency fund is not to wait until the end of the month to see how much you are left with. In fact, you should first put a calculated amount into your savings fund and then spend the rest as per your budget.
The idea is to put aside a decent amount into your savings account before anything so that you are not tempted to spend it on other things. This could also help you steer clear of impulsive buying and overindulgence.
Here is an article that’ll help you learn how to save money.
Put a Spending Freeze
Give yourself a contentment challenge every few months and refrain from buying nonessential items for a week or month. During this time, practice mindful spending and gratitude journaling as much as possible. This would help you in acknowledging the many blessings that you have in life and eliminate impulsive buying from your life.
You can make your spending limit work by preparing meals at home, cutting down budget on eating out, avoiding stores where you are likely to impulse buy, and refusing anything that is not a necessity. You will find that doing this every few months will help you save some extra amount for unforeseen events in life.
Cut Down Your Budget
This tip might sound too cliche, but there is no way around this when it comes to saving for emergency or any other purpose. So, free up some extra money by cutting down the budget for things that you don’t really need. This includes subscriptions to 500 cable channels, spending excessively on food, savings on bills. Thus, every dollar you slash from your monthly budget can then go towards your emergency fund.
Saving automatically is one of the best ways to build an emergency fund. This is how millions of people around the world are building up their savings fund. When you have to transfer money into your savings account, there are more chances of you not doing it altogether.
The best way to ensure a certain amount goes into your emergency fund every month is by getting a portion of your paycheck automatically deposited to a savings account. This way, you wouldn’t have the impulse to use that amount for anything else and risk putting off savings for the next month.
Find a One-Time Income Opportunity
With the ease of online earning, there are so many ways you can work and earn both inside and outside your home. You can take online surveys, offer an online service, participate in focus groups, or anything that could get you just that extra amount for building an emergency savings fund.
Here is an article that outlines how to earn via multiple sources.
Use the Emergency Fund Only in Emergencies
In order to make your emergency fund grow, it is crucial that you use this amount only for emergencies. As the time passes and the nest egg starts to build up, it is common among people to feel tempted to spend that amount on something else. Often it is a vacation or a luxury item that tempts you into using your savings fund. But you have to remember that it is called an emergency fund for a reason. Do not sabotage all your months-long effort and make sure to leave your emergency fund untouched.
Never get swayed away by the idea to withdraw from the account on the false premise that you can make it up on next paycheck. This would only set into motion a new cycle of overspending, making your emergency fund fall back down to zero.
I hope you’ve learned how to build emergency fund through impulse saving. Emergencies and unexpected costs have the ability to push you into debt if you do not have a safety net. They can also make an existing debt problem worse. While some believe it is sufficient to have one to two months’ wages in savings, it can possibly vary depending on your financial situation and budget. In any case, it is best to build an emergency savings fund that covers your household expenses for as long as six months.
Thus, an emergency fund and mindful spending are the key parts to any financial plan. If you think you could do with a little help in that, we have just the right solution for you.
Download the Money Doctor app to take control of your budgeting goals and get more creative about tackling expenses and savings. And remember that when the disaster strikes, the time to prepare has already long passed!