Steps to Creating an Emergency Fund
More than 60% of people in America can not afford to pay a 1,000 dollar expense from their savings. With a statistic this large, many people would benefit from an Emergency Fund. Whether you find yourself in the 60 percent of people that couldn’t afford the unexpected expense, or the 40 percent that can, starting or continuing to cushion your emergency fund is always a good idea. With your finances being an important part of your wellbeing, Buckner Wellness has compiled a list of ways to kick start your emergency fund today.
1. Create a budget- Start out by recording your monthly income and expenses. Look for expenses that you might be able to remove. This could be things such as subscriptions you no longer use, opting to eat at home more than going out, and limiting unnecessary expenses. Set a budget on how much you are going to spend and how much you are going to save. The 50 30 20 rule is a good rule to follow. 50% goes to needs, 30% goes to wants and 20% goes to savings.
2. Set up an Automatic Deduction- If you have the tendency to spend most of your money as soon as it hits your account, consider setting up an automatic deduction straight to your savings account. This can be a recurring payment and will help you stick to your budget and build up your emergency fund.
3. Don’t lose sight of the big picture- Stick to your guns, and your goals. It is often easy to get sidetracked and forget why creating an emergency fund is so important. Make a list of reasons or unexpected expenses that could occur, and refer to it when you are tempted to spend the money you would normally allocate to your emergency fund.
4. Be consistent-Just because you are able to save some money for a few months doesn’t mean that it is over. Create a habit of contributing to your emergency fund monthly. By doing this, you will be prepared for the emergencies life throws at you.
What steps have you taken to creating your emergency fund. What has helped you be and feel more prepared? Share your comment below and help your wellness community with your favorite tips and tricks.