Everyone should have money set aside in case of emergencies. But without having a solid plan and good habits, it is easy to digress from financial goals as saving does not come easy. You find that before the month-end, life interferes with the plan to save and money slips through the cracks. Bringing you back to where you started, with absolutely no savings.
In between all the expenses that come up during the month, how do you manage to have leftover to set aside for a rainy day? Here are some tips to save for emergencies no matter the amount you currently earn.
Set aside a specific amount for your emergency fund each month. Instead of waiting to see how much you have leftover at the end of the month, take out the portion you would like to save first. Always do this at the beginning of the month, or whenever you get your paycheck. Once this money is already in your account, you won’t be tempted to postpone saving it or spend it on something else.
Set automatic transfers
To ensure you continue taking out your savings first, set up an automatic transfer from your current account to your savings account. Set it for when you receive your paycheck so that you do not forget to put the money aside or get tempted to use it on other things.
Save up extra money
Every extra money you get in the form of gifts, tax refunds, etc. should go into your savings account. Since the money is not originally part of the monthly budget, you won’t miss it. Instead, it will move you closer to your goal.
Reduce your budget
While saving, you have a specific budget. You can save more money by constantly reviewing this budget and trimming down as many excesses as possible. Also, reducing the number of times you eat out or even paying a cheaper cable channel bouquet. Whatever it is, it helps in getting you closer to the goal.
Set realistic goals
Because saving money requires making some sacrifices that can wear you down, it is important to set realistic goals. Restrictions you impose on yourself due to your goals shouldn’t be too extreme. If they are, you are most likely going to snap and ruin all your good work. So if you have a goal of $5,000, reward yourself at every thousand dollar milestone. Treating yourself now and then will help you reinforce the idea that you’re doing what will pay off in the end.
Allow your savings grow
Invest your savings into a high-yield savings account or money market account. By using any of these accounts, it can grow and even give you more money. This way, your saving is also working for you.
Have limited access
You want to make sure that you do have easy access to make withdrawals from your savings account. Make sure your account does not come with a debit card. If it does, decline it and if you cannot decline it, cut the card up. Doing this will make you disciplined about not making withdrawals.