How to start an emergency fund?
You can use an emergency fund to cover all sorts of unexpected expenses - whether it's a job loss, car repair, or an unsuspected large bill, you can make a list of the things you consider emergencies and what you'd use the fund for. Those are the main suggestions, but you only know what an emergency fund looks like for you! It’s like having insurance for the curve balls life throws your way. Having an emergency fund is one of the intelligent financial decisions you can make in life.
This is an easy two-step beginner guide on how to start your emergency fund savings today.
Step 01: Budget, budget, budget!
Can't stress that enough!
It always starts with a budget. So get ready, set, go! Set a budget of what you can easily save each pay! It will help you make sure you're not over planning - or under planning! Budgets are there to help you determine the amount you can safely assign to different accounts. Sometimes 5%-10% of savings will fast track you to a solid emergency fund.
Thinking about 2 to 6 months of your current pay as an emergency fund is a good start, you can always add a bit more to it when you come into extra money!One of our favourite trends has been the DIY squiggly mirror. Check out this detailed tutorial and let us know if you give it a go.
Step 02: Have a separate account!
Think about putting money in a place that generates profit: short term investment!
You can open an emergency account. A high profitable savings account will help you get there. Make sure you don't take any money out of that savings account. That will guarantee no cost on the account and a solid earning rate.
Setting a separate bank account for emergency savings will also ensure you can constantly see how much you have.
