Use these tips on how to build an emergency fund on a limited budget to stash away money for unexpected expenses.
Having an emergency fund is important. It is something to rely on in times of trouble so you don’t have to immediately panic or wonder, “What now?” Building an emergency fund can be hard if you are living paycheck to paycheck. It may seem nearly impossible. Here are some ways you can build your emergency fund even if you are struggling.
How to Build an Emergency Fund on a Slim Budget
First, have a goal in mind. An emergency fund does not have to be a year’s worth of expenses. It can start out as just a couple hundred dollars in savings. The goal is to eventually grow it, but any money is better than no money in the case of an emergency.
If it is easier for you, try having your paycheck direct deposited. This way, you won’t see the money in your hands and it might be easier for you to resist spending. You can also utilize bank services such as having money auto-transferred as soon as it is deposited.
Ask your bank to save back a reasonable amount from each paycheck for you and put it in a separate account. It can be as little as $25 or $50 from each paycheck. For most families, this is just a night out at a restaurant you are giving up.
Save your change. It is amazing how fast it adds up. Just saving change in a jar can mean several hundred dollars after several months and it is easier to not spend it because it is change, not bills.
Look for ways you can trim your monthly expenses to add extra money to your emergency fund. Could you give up cable and go with a streaming service instead for TV? Could you go without new clothes this season and instead buy used? Small changes like this are nearly painless and add some money where you thought there was none to your fund.
Stop a bad habit and add the money that would have been spent on that to your fund for a period of time. This includes fast food, smoking cigarettes, going for shopping trips with no real need and so on.
Coupon your way to an emergency fund. If you don’t already coupon, now is the time to start. There is no need to go all extreme couponing with it, unless of course, you want to. Just buy what you would normally buy and put the coupon savings back into your fund. It will be like making money appear from nowhere and not having to give up anything that you need or normally would buy.
Keep making “payments”. You may be close to paying off something you are making monthly payments on. If this is true, keep making the same amount of money payments to your emergency fund instead. You are already budgeting for it, so it won’t hurt you where you are currently.
Stack Savings Tips
When I started making my husband’s lunch, he calculated how much he would save by not eating fast food. Then he went to the bank and had that amount taken from his paycheck and deposited directly into a savings account.
The most important thing to consider when creating an emergency fund is, it is not for extras. It is just for maintaining your basic needs. Being honest with yourself can help you be more realistic about how much money you will need to have in the event you need to dip into it in the future.
What are some ways you have saved money for an emergency fund?