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27 Aug 2019   /   0 comments

15 ways to save an emergency fund in a year

Caroline Mwandawiro

In this life, we can all admit that we would face things that we are not prepared for. There will be no warning, no instructions on how to cope with it. When these situations arrive, it can leave you helpless and confused as to the course of action in which you should follow.

Some of these situations could even be emergencies which would need to be answered immediately and would need a quick decision to be taken. Therefore, it is only fitting that you are completely prepared for the unknown. One thing which would surely help in this type of case is creating an emergency fund.

Saving up for an emergency fund can be difficult when you’re already stuck in a financial emergency. This is why TFC title loans are here to help you. We work with bad credit scores and provide same day funding.

An emergency fund would often serve its purpose in situations when financial costs would need to be extended. To have an emergency fund, a lot of saving would need to be done over some time. Here are fifteen ways in which you can achieve this goal in a year;

  1. Map out a plan

The first thing you would need to do is to map out a plan. There is no way in which you can save and be disciplined if you do not have a goal in mind. Make sure that you know the exact amount of money which you are saving for and how long it would take you to get there. Also, ensure that you put in the necessary measures which would ensure that this plan would be strictly followed.

  1. Expenses

To get something at the end of the month for savings, you would need to know the total amount you spend on savings every month. Bearing in mind that an emergency fund would come in pretty handy in the event of loss of your job, then you should prepare for your emergency fund to that. For example, you can target having just the right amount of money in your emergency fund which would last you for half a year in the event of loss of livelihood. This could be measured by thinking of the least amount of money which would be enough for you during this period.

It is important to note that expenses would most likely cover food, housing, transportation, utility bills and so much more.

  1. How long will the emergency period last?

When creating your emergency funds, you would also have to think about how long your emergency period would last. For example, if you lose your job, what is the probability that you would get another one within the same month? Knowing the particular period in which the emergency would last may prove to be virtually impossible. However, getting a good estimate would help you endure during this period.

  1. Set small goals

While most people would dream about getting a very large emergency fund, it is not always enough to just focus on the bigger picture. It is always recommended that you set some minor goals. You can always start by trying to set goals which would be met monthly. For example, you can set the goal of meeting a particular amount every month. You would quickly notice that setting smaller goals would go a long way in ensuring that you save up the total amount of money you want in a year.

  1. Quit Impulse buying

There is nothing that kills a plan to save faster the love of impulse buying. People who are hooked to this habit would tell you just how difficult it is to save on a regular basis. The good part, however, is that it is possible to get through the habit and save some money. However, you would need to follow some tips. These tips would include;

  • For one thing, you should always ensure that you keep your credit card away whenever you go shopping. The presence of credit card would make you feel like you have much more money to spend than you have. As a result, you would surely spend more than you planned to in the beginning.
  • Also, you should ensure that you do not carry more money that is required when shopping. Carrying just the right amount of money you need would ensure you do not have money at your disposal. It would help you save more for your emergency funds.
  1. Cut down on spending

Most people in the world we live in today believe that the only way to have fun is to spend. Granted money can buy you a lot of fun with the entertainment world and so much more. However, overspending would get you nowhere when it comes to saving for your emergency funds.  There are many ways in which you can achieve this. Some of them include;

  • You should always ensure that you have a budget for everything that you need to do and buy. Making a budget would require to be objective in how much you think you would spend during a certain period.
  • You should also try to think in terms of what you need and not what you want. This would ensure that you do not spend all your money trying to get things that are out of your reach.

The truth is that cutting down on your expenses and other trivial matters would make more funds available for you to save.

  1. Create a separate account

Most people make the mistake of adding the money which they wish to save to their normal savings account. However, in the long run, this may prove to be less appealing that you would expect. This is due to the rising temptation which would come with having that money at your complete proposal. Thus, having a separate account would ensure that the money is out of your reach at all times.

Many people have seen the benefits which comes from putting your emergency funds in accounts which are made to yield much more profits. These accounts would help you to keep your emergency funds growing even without you adding to it.

Another thing which should be avoided is the keeping of emergency funds as cash. One reason why this method is not advised is that the inflation percentage can increase at any moment in time. This would lead to a loss in terms of purchasing power of your money. The truth is that it is always a wise thing to put your money into an investment that is risk-free.

  1. Transfer money automatically

The lure to keep some money for yourself may be way stronger than you think. Thus, when you receive your income for the week or month, it is always recommended that you transfer it to another bank account. Fortunately for us, most banks have made it possible to automate your money to another account once you receive a new paycheck. Thus, you can have no option whatsoever when it comes to saving for your funds. This is true as the money would go straight to your emergency funds account instead of lingering in your accounts.

  1. Make sure you can access your cash

Your cash that has been saved up cannot be referred to as money for an emergency if it is somewhere that is not easily accessible if a situation arises. Thus, it is important that you stay away from accounts or saving money which requirements are to keep your money frozen for a particular period of time. Instead, ensure that you pay attention to the rules of your emergency funds account before you put all your cash into it. This could be a life-saver when an emergency springs up.

  1. Realistic goals

It is one thing for you to want to save, it is another for you to set goals that you would be able to attain. It has often been said that one of the biggest reasons why many people succeed in life is because they set goals which they often fail to attain.

For example, if you earn around $6000 every month and you have bills worth up to $5000, the possibility of you saving every other penny that comes your way would be extremely difficult. You would most likely have some other things which would creep up from time to time.

Therefore, instead of trying to outdo yourself. Try small and set realistic goals. This would allow you to finish the race and not give up too early on the amount of money you have managed to save.

  1. Tax refunds

One thing which people fail to use effectively is their tax refund. Most people, especially in the United States, have started using these refunds to pay for the various debts they have. However, this money can also be used for your emergency funding. When tax refunds are used properly, you would be surprised at the boost in which your emergency savings would take in a very short period of time.

  1. The change matters

When people go to shops or stores to get new clothes and other items, there is this feeling that the change is no longer worth keeping. However, if you should actually keep this change for a long period of time, you would be very surprised as to how much you would have been able to save during that period of time. It is recommended that you keep this cash gotten together in a small jar. You can then decide to add it to your monthly target for your emergency funds.

  1. Getting a second job

For most people around the world, getting a second job would very well mean more money. However, it can also serve so many other purposes. One such purpose would be increasing the amount of money that you can save at the end of the month. Thus, when you have your income flow coming in from many angles, you would be able to contribute more to your emergency funds when the time is right.

Apart from getting a second job, there are other ways in which you can get a supplementary income. One way is by having a yard sale. This would especially come in handy when you have a lot of old or unused things in your home. You would be able to raise some money from getting rid of them while also managing to declutter your life.

  1. Check it regularly

While it is important that you stay away from the emergency funds, it is also important that you check how it is doing from time to time. In other words, it is okay if you check and assess how much you are saving and if you can even do much more.

This would ensure that you know the state of your emergency funds at every single time. This act of assessing your emergency funds would be essential especially if you are expecting some major changes in your life. For example, moving to a new area or getting married can serve to be a major change in a person’s life.

  1. Remember it is for emergencies only

There is always the tendency to get carried by a large amount of money in your account. It is important to always remember that the money stored there is for emergencies only. Here are some examples of what emergencies are;

  • Health issues that are fatal
  • Situations that have to be resolved immediately

However, emergencies cannot be said to be;

  • Getting something from a shop
  • Funds to have the perfect holiday.

Having it in mind would ensure that you do not spend the funds which you have labored to save spent on trivial matters.

Conclusion

Here you have it! Here are the 15 ways in which you can effectively get your emergency funds up and kicking. Following these tips would get you closer to your goal of having an emergency fund that is large enough to support in terms of a disaster. It would surely not let you down.

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