Did you know that the majority of Americans do not have large enough savings to help them through an emergency, medical or otherwise? In fact, in a recent survey, it was discovered that only 39% of Americans could cover an emergency expense of $1,000.
An emergency fund is crucial to protect you during times of trouble, as the alternative in many cases is growing debt, lower credit, and a cycle of financial hardships.
The good thing about an emergency fund is your goal is to have three to six months of your salary or income saved, just in case you were to lose your job. If you don’t have an adequate fund for emergencies and want to get started, add $200 without even thinking about it. With a smaller amount, you’ll feel motivated to keep saving after your goal is quickly reached.
Open An Extra Savings Account
One of the first things you should do when saving for an emergency fund is open a separate account. When you mix your funds with general savings, you’re not remaining focused on the goal of building an emergency fund, and there’s a far greater chance you’ll use that money in a way it's not intended for.
Use Automated Deposits
One of the easiest ways to quickly build a savings account is by automating transfers from your bank account or via direct deposit. If you want $200 in your account in two months, that means you’ll only need to contribute $25 a week – that’s less than one meal outside of the home.
Make More Money
If you can’t pick up seasonal or temporary work, find ways to make money around the house that will help you contribute smaller amounts to your goals. Some quick ways to get started include:
Reviewing your insurance premiums to see if you can reduce costs.
Cut cable bills temporarily or permanently and replace them with cheaper streaming apps.
Start using coupons for regular shopping, like groceries.
Put windfalls, like tax returns, directly towards your emergency fund.
Download an app like Giftloop that will help you earn extra money while you do simple tasks like watch videos, play games, or fill out surveys.