Jump-Start Your Emergency Fund In These Six Simple Steps
Family expenses, debt and rent, they all play an intimidating role when we start planning on saving for an emergency fund, mainly because it seems like every penny of our income is already accounted for.
Nevertheless, creating a strong reserve of cash can be a great tool to achieve financial peace of mind in case something unexpected happens.
Address debt properly
Saving may not be a consideration for someone who is struggling to get out of debt, especially with high-interest obligations, like credit cards. In this scenario, it may be wise to pay down balances first, as fast as you can. After this, you´ll have more ground to start planning an emergency fund.
Now, if you have handled your credit well, and your balances are low, you can start saving for an emergency fund while taking care of your credit obligations.
Making a budget is the only way to have a better view of your financial situation, this control will allow you to know which aspects are more prone to cuts. Easy things, like start bringing lunch to work, riding a bicycle or using public transportation to get to work can represent cuts that will allow you to have more income each month.
If you are responsible enough and commit yourself to making sacrifices, you can see positive results in a matter of weeks. You just need to enhance your budget making skills, and the internet is a good source of online tools that can help you enhance your budget-making skills.
Day by Day
Daily expenses and debt may seem like they leave no room to put aside a large amount of money for emergencies, but that’s not what’s important. Getting started is what really matters.
It is important to see things realistically. Set achievable goals for the short term. The key is to start little by little no matter what the amount is. A small goal can be attempting to save £50 or £100 monthly, the important thing is to start building a good financial habit that can provide help during a financial emergency.
Make the process easy for you
You need to be aware and make use of the tools out there that can help you save more consistently. It may happen that you want to start saving towards an emergency fund, but every time money comes in you forget to save or you don’t have the time and you just spend the money. Automatic transfers can help you with this problem.
If your employer does have direct deposit you can actually set a small portion of your salary and it will go directly to your emergency fund. That way you can save and you won’t even notice, the money will be there in case something unexpected happens.
Keep the funds accessible
Since emergency funds are created to be there for emergencies, it makes sense that they remain available to be used when you need them. In that sense, locking funds up in saving accounts that will charge a fee if you withdraw the money may not be the best idea.
Check with your bank and see what options they have that can also help you with this process. Money market accounts are a good option here.
Boost your earnings
Boosting your earnings will give you more room to easily save up for emergencies. This means that you need to look for other sources of income. Right now a lot of people are checking for old PPI claims they may have and it is currently the best way to generate additional, tax-free money.
After the PPI scandal, the government is pushing banks to give customers back the money they unfairly paid for insurance policies without their knowledge. This means that if you had a credit card, loan or mortgage back in the nineties and up to 2010, chances are that you may have been charged an insurance policy as part of that loan without your consent.
Right now thousands of people are filing claims against some of the most important banks in the UK for this and the government has set August 29th 2019 as the final day for anyone who wants to file a claim.
If you believe that you may have been affected by this and if you think that it would be a good jumpstart for an emergency fund, then click here and let a group of professionals guides you in filing this claim correctly.