(ProsperNews.net) – The idea of an emergency fund is something that many of us aspire to. An emergency fund is money you put away in the event of an unforeseen expense. Some examples include:
- Car trouble
- Emergency health issue
- Getting laid off or having to miss work for a week or more
- Unexpected appliance repair or replacement
- Emergency travel
- Natural disaster
- Evacuation expenses
These are just a few reasons to have money saved for the proverbial rainy day. The problem is, for many Americans, saving up an emergency fund is tricky, or downright impossible. Not only that, but an emergency fund can tap out quickly depending on the type of emergency. And because when it rains, it pours, you could be hit with another problem before you replenish your fund.
How Much Of A Fund Do You Need?
Start where you are, and work your way up. Ideally, you would want a minimum of $1,000 in your fund. Over time, try to work your way up to saving the equivalent of a month or more of income so that if something happens, you can cover your household expenses, or withstand unexpected expenses while still paying your bills.
You can start by having money automatically withdrawn from your account regularly. Even if it is only $10 a week, it’s something. Gift money, tax returns, or other windfalls are ideal for saving because they don’t take away from your paycheck.
What Happens If I Don’t Have An Emergency Fund, Or It Runs Out?
Unexpected emergencies are no fun, and it is easy to become fearful and stressed. With that said, this is not the time to panic. There are steps you can take to help you weather the storm. These tips can help you get through the emergency and back on track.
Cut Spending
Now is the time to view expenses with a critical eye. Start by cutting any unnecessary items such as streaming services, put your gym membership on hold, etc. Trim your grocery budget if you can, and scale back by paying the minimum on your credit cards. These cuts aren’t fun, but they are temporary. Small recurring expenses eat at your monthly budget more than you know.
Slow Down And Shop Around
If you are hit with an unexpected car or home repair, slow down and make sure you are getting the best deal. Make a few more phone calls, get some more estimates. It may take a little longer but could save you hundreds of dollars.
Find Extra Cash
Clean out your garage or attic and start selling items you no longer use. Have a garage sale or sell online. You may be surprised at what you can make off of things that are just taking up space in your home or storage.
Start a side hustle such as food delivery, dog walking, babysitting, or driving Uber or Lyft. There are often seasonal jobs for companies like UPS or FedEx, or other delivery services. You can also rent out storage space in your own garage or extra room. It is always a good idea to keep a list of ways to create income in the event you are in need.
Seek Out Local Resources
You may not want to ask for help, but sometimes you must. Depending on the emergency, you may qualify for assistance. Examples include help paying your utility bills, food for your family, reimbursement for evacuation expenses, or other services. Take advantage of them, that’s what they are there for.
Build It Back Up
If you saved $10 a week for a year, you would have nearly $500 saved for an emergency. The next trick is not to touch the money. It might be tempting to buy that item that just went on sale or use it for holiday spending but resist the urge. Make it as difficult as possible to access the fund. Keep it in a separate account that you can’t just spend at the touch of a button. The more inconvenient it is to access, the less likely you’ll be to spend it.
Emergencies happen. Be as prepared as possible by keeping a list of local resources that can help you, and get creative when it comes to adding more cash to your emergency stash.
Copyright 2023, ProsperNews.net
