How to Put Away Emergency Funds
How to Put Away Emergency Funds – Nobody plans for emergencies but they come anyway, Emergencies are constant in life as no matter how careful we might appear to be, we will be caught up someday in a situation we did not plan for and in most occasions, these circumstances would require that we spend more money. as much as we may not be able to see ourselves through in regards to the trauma that emergencies might come along with, we might be able to handle that financial implication if we plan our finances to include emergencies when it had not happened yet.
It might be difficult in a way to fund emergencies, but taking out funds gradually through an intentional medium would be quite helpful. In this article, we will show you how you can put aside funds for emergencies before the need arises so that you will not be taken unaware. Top 4 Advantages of Online Banking
How to Put Away Emergency Funds:
Learn effective ways to put away emergency funds. Explore strategies for financial security and emergency preparedness in this read.
1. Chunk it down
In a bid to put aside emergency funds, some people have put themselves in a situation that has made the act quite impossible. What do we mean? Some persons set big emergency goals because they want to have 10,000 dollars in their account for emergencies, so, they run their budget to only favour emergency funds. you shouldn’t do so, you should start small and aim big.
Here’s what we mean. Rather than set a goal of 10,000 dollars on your first attempt, you can decide to set aside just 5% of your income for emergencies for a period of time. you would realize that after about 6 months, you might have gathered enough money in a less stressful manner. Don’t try to achieve it all at once as great things do not happen overnight.
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2. Get a separate account for emergency funds
Do not make the mistake of putting your emergency account in the same account you use for other purposes. Get a different account that would help you manage your inflow and outflow of the emergency funds.
In choosing an account, you should consider a financial institution that has little or no fees or charges but has some kind of interest rate. Having a separate account for emergencies helps you to stay in check because when it is all joined together with your daily account, the urge to make use of the funds will grow bigger and stronger, thus, you may not be able to meet your emergency goals or dreams.
Doing this in the long run will also save your emergency fund, ensuring that you only make use of the funds when you are really in an emergency.
3. Make the process automatic
After having an account solely for the purpose of emergency funding, you should endeavour to make deposits into the account automatically. This is one of the blessings of online banking as you can stay in the comfort of your home and just designate a particular sum of money to that account. Alternatively, you could go to the bank and ensure that automatic deductions are made and transferred to that account when money comes into it.
Ensure that you treat your emergency fund the same way if you had a bad creditor, give it the necessary attention and priority as you would give to a pressing need. This itself would help you stay committed and consistent in the process.
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4. Channel Extra Monies in that direction:
Occasionally, we all get extra cash from somewhere, when this money comes, we tend to use it for things that don’t really matter. The best way to boost your Emergency funds is to ensure that when extra money comes, a greater part of it should be channelled to your Emergency account. Have the mindset that extra cash equals more emergency savings.
5. Increase your Income:
If you really want to achieve more in a short period of time, the best thing is to look for ways you can increase how much comes into your account. You could create digital products, offer your services as a freelancer, create Ebooks or walkthrough videos, sell old or unused items or get a side hustle.
Taking action to increase your income, wouldn’t only increase the emergency account but also your spending limit.
6. On a Regular basis, Conduct a Review:
We grow and face challenges daily, and so do our finances. Just as it is important to cultivate a saving habit, it is also important that we regularly review our budget to catch up with our present financial situation. You should not allow your budget to still be the same as when you were earning $100 weekly.
Aside from the cases of increments, there could be a need for a cut down on certain expenses like food, shelter or clothes just to meet up with certain things like your emergency fund.
After you are done with paying debts, you should also take a break and review your budget. This would help you allocate that extra resource to places that need some more money such as your Emergency account.
7. Use it only when it’s an Emergency:
You are building an Emergency account not a savings account, you should only make use of the funds in the account when there is a dire need to. To make this easier, before you open the account, you should outline the things that would fall in the category of ‘Emergencies’ and ensure that you are disciplined enough to respect that decision.
The emergency fund should be your last resort when it comes to spending, you should only make withdrawals from the account when you do not have any other choice than to do so. Top 4 Advantages of Online Banking
Conclusively, emergency funds could become lifesavers in times of need. It could save you the stress of begging from one place to another. You may get hit by a disaster but it is very helpful as it would help you stand tall financially while trying to handle other effects that may come alongside the disaster.
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