Building an emergency fund is one of the most important things you can do for yourself. Too bad it’s also one of the hardest financial tasks to tick off your to-do list.
Between a high cost of living and stagnating wages, you may not save as much as you need. But the economy isn’t the only reason why your emergency fund might be empty. Bad budget habits can stand in the way of a substantial cash cushion.
Saving may be hard, but it’s possible with grit and determination. Let’s look at how you can prioritize savings, and what you can do if an emergency arrives before you save enough.
What to Do if Your Emergency Fund Falls Flat
If you struggle to sock away some cash each month, you wouldn’t be alone. Most people run into the same issue.
According to a new Bank rate survey, 26 percent of Americans have zero emergency savings set aside. That leaves more than one-quarter of people living without a financial safety net of their own making. These same people have to borrow from friends, sell their belongings, or take out direct deposit loans to cover an unexpected expense.
Any of these three options can help you in a pinch. However, researching your options of direct deposit loans online might provide a quick solution to your problems. Most direct deposit loans have fast and convenient applications that accelerate your request for funds. If approved, you may receive your loan in your preferred account as soon as the next business day.
Selling your belongings may deliver fast cash on a similar timeline, but it requires you find a buyer as soon as you make your listing. Borrowing from friends presupposes your loved ones are better off than you. They may not have anything to give you if they don’t have emergency funds themselves. You won’t know until you try, so explore all three options.
How to Save More Money for Emergencies
To save more money, you have to put your detective’s cap on and determine why you don’t currently save. A budget will help you make this determination. By tracking your typical cash flow, you can flag issues with your income or spending.
- Do you tend to make a lot of small, unnecessary purchases throughout the month that add up to hundreds of dollars?
- Does your income stretch to cover all your essentials?
- Do you have a specialized savings account, or do you let your surplus cash sit in your checking account, where it’s liable to disappear in a spending spree?
The answer to these questions establishes your course of action:
- Slash unnecessary spending until you can save about 20 percent of your take-home pay. Non-essential spending on streaming services, online shopping, takeout, and entertainment are usually good sources of extra cash.
- Start thinking about making a career move. While getting a new job is no easy feat, you can take the first step today. Meanwhile, check out these tips to cut down on your monthly expenses until you can earn more.
- Open a dedicated savings account that’s separate from your checking. This will prevent you from spending cash you can save. Better yet, high-yield savings accounts earn more money on the dollar than a basic account.
Focus on What You Can Do, Not What You Should Do
Financial advisors say everyone should save three to six months of living expenses in an emergency fund. That amount can be daunting for anyone to achieve. So, don’t focus on these numbers and instead look at your budget. Use this spending plan to upgrade your savings to whatever you can achieve today.
