Five ways to save for an emergency fund
Everyone should have an emergency fund. We’d all love it if life were smooth sailing, but sometimes it can be a rocky road and being prepared helps get over the bumps. I’ve listed the reasons why you need an emergency fund, but I didn’t get around to how to build one…until now. It’s way easier than you think.
- Automate it
Visit your bank’s local branch and ask to set up a separate savings account. Have automatic payments from your primary bank account go to your new savings account regularly—be it weekly, biweekly or monthly. You will be shocked, and delighted, how quickly even just $50 a month adds up when you’re not looking. Tip: When you’re opening the new account at your bank, asking the representative to unlink that new savings account from your main account so that when you do your online banking, you don’t see your emergency fund and aren’t tempted to use it for non-emergencies. Out of sight, out of mind!
- Stash your windfalls
Whether it’s an unexpected inheritance, or a payment from a last-minute job, take whatever windfalls you receive directly to the bank and deposit into your savings account. Since you weren’t budgeting for it anyway, you might as well put away and pretend it never happened (until you actually need it for an emergency).
- Earmark your tax refund
If you’re in a more “modest” tax bracket or are just out of college/university, chances are that you receive a GST cheque and a decent tax refund from the government. Walk that cheque right to the bank and deposit it in that awesome new savings account of yours.
- Make more money
I hate to be Ms. Obvious here, but in the new gig economy, if you find yourself bored, restless, or just wanting to make a bit of extra coin, get a side hustle: sell some old stuff on eBay, turn your crocheting obsession into an Etsy store, ask your media friends if they’re looking for blog content…the options are endless!
- Slowly and steadily
Don’t psyche yourself out just because it’s been a few weeks and you still don’t have three to six months’ living expenses saved up—these things take time. Have an amount you can afford automatically transferred to your new savings account regularly, and supplement that with windfalls and extra money you’ve earned. Consistency is the key.
The process of saving for an emergency fund can be slow and frustrating (if you’re as impatient as I am), but in a year or two, you’ll be thankful you did. Happy saving!
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