You just never know when something could go wrong that requires a little extra cash. Though you have a few bucks to depend on from your paycheck, if the emergency is large enough you may find yourself in a bit of a jam. One of the best defenses you have against financial emergency is planning. For instance, saving up for a rainy day gives you a cushion you can fall back on should life throw you for a loop. An emergency account has saved many of people in the past, and it can save you if you simply know where to start.
There’s Nothing Wrong with Backup
Before discussing how to start and fund your emergency account let’s talk about having a backup. Since you don’t have any funds stored away at the moment, should something happen that requires instant cash, you need to know where to turn.
Abusing assets by taking out a retirement loan comes with high consequences and, therefore, should be avoided at all costs. Instead, you can apply for bad credit installment loans. Whether you have good or bad credit, you can get approved for as much as $1250 which should more than help with your problem. This gives you time to handle the problem and start building your savings.
Now that you have a backup plan in place, let’s take a closer look at how you can start your emergency saving account:
- Shop around – start by shopping around for the best interest rates on a savings account. You want a bank that has low deposit amounts, high-interest rates, and minimal fees.
- Set a goal – there are all kinds of debates on how much a person should keep in their emergency savings account. Some say $1,000 while others say it should be at least three to six month of your income. Set a realistic goal for yourself so that you don’t get discouraged. Perhaps start with $500 and work your way up.
- Check the budget – How much can you afford to put into an emergency savings account? You’ll need to review your budget to see how much excess cash you have. If you don’t have any room to spare, you’ll need to look for ways to boost your income or start cutting back on your expenses. If you do have enough, determine how much you’ll commit to putting in an account on a weekly, bi-weekly, or monthly basis.
- Increase Your Income – If you’re having a hard time finding a way to save for an emergency, then increasing your income is recommended. Having more than one income stream can help boost your savings quickly. You can try passive income options like affiliate marketing or you might prefer to find a freelance gig to bring in regular income.
- Pay Down Debts – A big part of why families aren’t able to save is because they are currently dealing with too much debt. If you can’t save just yet, at least start chipping away at your debt to increase the amount of excess money you have to put away.
Rainy days are bound to happen. When they do, you can make getting through them a lot easier with an emergency savings account (and a good backup plan). If you don’t have anything put away, you can start the process today by using the steps listed above. That way, the next time a little rain comes your way you have an “umbrella” to protect you from getting wet.