An emergency fund acts as a financial safety net, protecting you from unexpected events such as losing your job. The peace of mind an emergency fund offers is not in doubt, but building it can be overwhelming. We explore 16 strategies to help you boost your emergency effectively:
Track Your Expenses
Awareness of your finances is key to any planning. You should scrutinize your bank statements and credit card bills to identify areas where you can cut back. Subscription boxes, streaming platforms, and impulse online purchases are the first places to look, as they often go unused.
Frugal Fun
Entertainment doesn’t have to be expensive. If you’re used to enjoying expensive meals out or having drinks with friends every Friday after work, you could be eating into your savings budget. Instead, explore free or low-cost activities like cooking at home for friends or visiting parks, free museums, or local music events.
Switch Bills
Money comparison sites allow you to research different companies for the best prices on the likes of utility bills and home insurance. Instead of staying with the same provider for years, see if you can negotiate a better rate elsewhere.
Side Hustles
To boost your emergency fund you can look for a side hustle if you have the capacity to. There’s options to work from home freelancing online or you can take on a part-time delivery job or even dog walking; whatever it takes to make extra cash.
Sell What You Don’t Use
Lots of people are taking to the likes of Depop and Vinted to make money selling old clothes and accessories. While ebay has been around for years, newer platforms are giving second hand purchases a new lease of life.
Challenge Yourself
To give yourself a challenge, you should set mini savings goals to keep you motivated. This could be cutting out your daily coffee shop latte and putting that money towards your emergency fund as every bit counts.
Automate Transfers
If you have a tendency to spend the money you were planning to save you should think about setting up automatic transfers from your checking account to your savings account each payday.
Round-Up Savings
Many banks offer “round-up” programs that automatically round up your debit card purchases to the nearest dollar. This money can be transferred directly to your savings account, and you will soon see cents add up to hundreds of dollars.
Tax Return Time
If you are lucky enough to get a tax windfall don;t think this is a free pass to going on a spending spree. Instead, allocate a portion or all of it to your emergency fund and think of it as a savings bonus.
The 52-Week Challenge
This 52-week Challenge is a popular method of saving that involves saving a specific amount each week, increasing by a dollar each time. By week 52, you’ll have saved over $1,300 in your emergency fund.
The No-Spend Weekend
Dedicate a weekend to avoiding unnecessary spending and being as frugal as possible. Instead of brunch out, cook meals at home and use streaming services instead of going to the cinema. The money that you managed to save will keep you motivated to repeat this weekend again.
Coin Jar Creativity
Keeping a jar for loose change seems like it won’t make a difference, but at the end of the week or month, when you deposit the amount into your emergency savings, you will see just how much loose change adds up.
Bonus Boost
If you receive a work bonus or unexpected financial windfall, resist the urge to splurge and put it directly into your emergency fund to give it a significant boost. This may seem boring, but you will be glad of your sensible actions when you become financially stuck.
Gift Redirect
If you receive unwanted gifts, consider returning them for store credit or cash. Use the money to bolster your emergency savings and leave the guilt behind as the person has still done something nice for you, just in a different way. If you have a close relationship with someone, you can be very direct and ask them for a cash gift rather than something you won’t use. If you have a big birthday, you can ask family members to chip in rather than have lots of small gifts.
Small Wins, Big Results
Celebrating your milestones when you reach your savings goals will keep you motivated on your journey. Knowing that you can be financially independent can give you a sense of pride, and you will reap the rewards for years to come.
Visualize Your Goals
Creating a vision board or setting a phone wallpaper with your emergency fund target amount will also keep you on track. Keeping your goal in sight can fuel your determination and can even inspire others to follow suit.
Harvi Sadhra is the CEO of Revir Media. He has over 10 years of experience in digital media and has been featured in many of the largest media brands on topics related to finance, stocks, money, technology, and more.