With thousands of businesses closed and temporary layoffs happening worldwide, most people felt the crunch. As the global economy recovers, most clearly understand the importance of maintaining an emergency fund.
The reality is financial emergencies can happen to anyone at any time. You may suddenly need expensive medical treatment or crash your car and need to find a mechanic. Whatever your emergency, having a dedicated savings fund can help you through tough times. The only problem is, how do you build an emergency fund when you are already on a tight budget?
For one-time emergency situations, you can always get fast cash in Ottawa or Omaha from a Payday lender, but most people need a more permanent solution. Discovering ways to find more money in your tight budget will require discipline and dedication. Let’s look at a few tips to help you build your emergency fund when you are already strapped for cash.
Track Your Spending
You probably know the amounts of your recurring bills like rent, utilities, and cell phone service. However, most of us are oblivious to the trickle of money we spend daily on small things like coffee, lunch breaks, and that extra snack when we stop for gas. If you want a tighter hold on your budget, you need to know where your money is going.
One of the best ways to visualize your spending is to physically track it. Get a receipt and put it on your budget sheet for every dime you spend in a month. At the end of the month, you can see exactly where you are spending your money. This visual representation of your spending will give you a clearer picture of the areas where you can cut back.
Grocery List
Groceries are an obvious necessity, but you may spend too much at the market without realizing it. The money you can save on groceries can be easily rerouted into your emergency fund. The first priority when heading out for groceries is to make a list. When you have a list of items for reference, you are less likely to pick up random items you don’t necessarily need.
Another great tip for saving at the grocery store is to make a meal plan for the week and only include the needed ingredients on your list. Never head to the store when you are hungry. You are more likely to make impulse purchases when you have an empty stomach.
Review Your Insurance
Most of us take for granted that our insurance premiums are a fixed expense. Year after year, we pay the same premiums without looking for discounts that could be applied. If you are trying to trim down your budget, you might want to start by giving your broker a call. If you have a good driving record, you might be able to negotiate a better rate.
Talk to your agent about discounts that could save money on your insurance premiums. Most insurance companies will not advertise the available discounts, so you must ask your agent if there is anything for which you qualify. Standard insurance discounts include:
- Safe driving discount
- Seniors discount
- Military and veteran discounts
Avoid Banking Fees
If you are stuck with a bank charging you monthly fees just to have a savings or checking account, it’s time to start shopping for a new bank. You may not think that banking fees are a big deal and just part of life, but with the right bank, you can save a substantial amount during the year. Find a banking institution with no or minimal fees and direct your savings into a dedicated Emergency Fund.
Stick to Essentials
Most of us don’t realize how little we need to survive and be happy. In a material world, we are trained to believe that material things and abundance are the pathways to contentment. The truth is, having what you need and no more is enough to give you everything that you need in your life.
If you are already on a tight budget, finding extra money to build an emergency fund may seem unattainable. However, if you focus on spending your money on only the basic necessities, you may start to see a change in your spending.
Avoid Credit Spending
If your income covers your basic expenses, you may be tempted to put unnecessary items on credit. If you want to build your Emergency fund, one tip is to put your credit cards on hold. Take them out of your wallet, hide them in a drawer for a few months, and work on paying down your debt. If you can wipe out your credit card debt, you can reroute those monthly payments into your Emergency Fund.
Review Your Subscriptions
The average American has more than 10 subscriptions which can put an unnecessary strain on their budgets. Reviewing your subscriptions is a great place to start if you are looking for places to cut back on your budget. If you have several magazine subscriptions or a variety of subscription boxes, these are likely things that you can do without as you build your Emergency Fund. You may also want to reconsider your cable subscriptions and drop your coverage down to the basic level to help you save more money.
Shop Wisely
For those that live on a tight budget, frugality is a way of life. If you want to save money regularly, you need to become a wise shopper. Getting the best price on the items that you need will free up more room in your budget for an Emergency Fund. You must learn to take your time with purchases and shop around before buying.
Another option for getting the best price is to buy items that you need second-hand. There are many online platforms like LetGo and Poshmark where you can purchase gently used items and clothes at highly discounted prices. You should also wait for sales on items you need and look for online coupons that will drop the tag prices.
Automated Savings
Once you have identified how much you can afford to put aside toward your Emergency Fund, it’s time to automate your efforts. For example, if you can afford to put away 5% of your weekly paycheck, make arrangements with your bank for an automatic transfer as soon as you receive your deposit. This way, your savings will be automatically routed where you need them to be, and you won’t be tempted to spend those dollars later in the week.
Auto Bill Payment
If you want to automate your savings, you may want to take a further step and set up autopay for your monthly bills. Most of your regular bills are the same each month, making it easy to anticipate your costs. Set up autopay for all your bills; you will never need to worry about missing a deadline or paying late fees. Having your bills set to autopay will give you a clearer view of your budget and the available cash to put into your Emergency Fund.
Anything can happen in life. There is no way to anticipate when you may have a financial crisis. You could lose your job unexpectedly, need cash to pay an unanticipated repair bill, or have medical costs to cover. Using these methods, you can break down your already tight budget and find the money you need to build your Emergency Fund.