How to Build an Emergency Fund

February 7th, 2018 | Author:

[W]hen you’re struggling to pay bills, it can seem impossible to get ahead. Even if you have made it your goal to start saving money or open a savings account, it may seem unachievable if you can barely make ends meet. However, it is essential to create an emergency fund even when it seems like you have no money. Here are a few ways to start working on that goal.

Why You Need an Emergency Fund

First, you need to understand the importance of an emergency fund so you can make it a priority. An emergency fund will help you cover unplanned expenses when you don’t have the funds in your checking account. It will help prevent bad credit, which could happen when you can’t pay your bills. It can also mean the difference between keeping your utilities turned on, making the car payment or even paying the rent.

How to Build an Emergency Fund

So you don’t think you have enough money to start saving? You might be surprised at how you can save even when you think it’s impossible. Just realize you might have to start small. Here are a few ideas:

• Save all of your coins from purchases – put away those quarters, dimes, nickels and yes, even pennies. Put them in a drawer somewhere until you have enough to open a savings account.
• Round up when figuring your bank account. If a purchase or payment costs $55.30, round up to $56 or even better – $60. If you subtract that from your total, it’s like it doesn’t even exist, but it’s there when you really need it.
• Save your $1 bills or even $5 from purchases. Is $1 going to really save you when you need to buy something or pay a bill? Not by itself, but in time those dollars add up.
• Give up something. Look at your budget and see where you can cut expenses to save money. You can give up your gym membership and work out at home or start running.
• Find ways to save money and then put those savings aside. You have a coupon for $1 off, so put that dollar aside. You buy a pair of jeans on sale for $10 off, put that $10 in savings.

These are a few ways you can start building your emergency fund. As the money begins to add up, you’ll discover how much better you feel and how much fun saving money can really be.

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