Standard rhetoric suggests that preparation is half the victory. And yes, it’s hard to disagree – but how much emergency fund is enough for the future? We’ll find that out…
When it rains, it pours. And when an emergency knocks in, it tags along a few mysteries to counter. Some can be devastatingly harsh, while others can be easy-going. Spoiler alert: Just as an emergency is, it’ll always require a substantial cash amount and maybe an extra portion of perseverance to get you through.
Emergency funds come in handy when things go south and provide extra cushioning to the harsh landing. An emergency can be anything and most likely range from bad to worse. It could be your car breaking down or unexpected house repairs after a raucous storm. Saving for the future is prudent and guards you against unprecedented losses to not get stuck between a rock and a hard place.
The rule of thumb
If it lingers on, such that you constantly wonder how much money you should have in your emergency fund, then it’s simple; save a three-month-earning amount upfront. This amount may not be too much to make an emergent problem disappear into thin air, but it’ll jumpstart you and keep you going.
If feasible, make a rough estimation of your monthly spending and extrapolate it across three months. Please keep it safe somewhere where you can access it with the click of the thumb. However, if you have a family, your expenses may skyrocket at the onset of an emergency. Therefore, create an emergency saving plan that covers six months – or, if it’s okay for you, seven to eight months. Sometimes, cash loans can help out in emergencies when you hit a dead-end, but try getting prepared before coming to this point.
Ways to save money for emergency funds
You can start saving money by taking the toddler steps of sectioning a small percentage, say a third of your monthly payments. In the long term saving spell, it would be worth it. Just so you should know, different emergencies need varying amounts of money. Some may not need thousands of dollars to ebb away, but it’s always wise to prepare for a worst-case scenario.
Therefore, aim to save at least $1,500 in your emergency fund to keep you prepared just in case. If you can do more than that, then well and good, it’ll seal the crack even better. However, try applying for instant payday loans when the situation calls for it; they’ll prove helpful.
Here are a few tips to save money for an emergency fund.
Track your expenses
Deciphering how much money goes into small and usually unnoticeable expenses can help you track your spending. More often, impulse buying is a huge issue, and you may do it lousily. If possible, make a list of your expenditure at the end of each day and see where your money went. Tracking your expenses goes a long way into prudently managing your bills and keeps your costs in check not to overspend unnecessarily.
Diversify your income
Don’t underestimate the importance of having a separate flow of income on the side. If you’re doing a day job, try investing in something different, like venturing into a small business that won’t eat much into your working time. Diversifying your income helps you save more since you get an overspill of cash when taking care of your expenses. Don’t be scared to take chances in investments because you’ll be elated if you become successful with it. If the capital isn’t enough, apply for small cash loans to get you started.
Sacrifice a little; it’s worth it
If you’re the big spender, try curtailing your costs for the sake of saving for the emergency fund. Minimize your vacations and cut your monthly food costs by eating enough for you without spilling. Sacrificing is worth it in the long term as it cuts down unnecessary expenses to keep your money in check and make substantial savings for an emergency fund.
Involve your spouse
If you have a spouse, don’t take on the entire savings burden by yourself. Try involving them and let them lend a hand. Two hands are better than one, remember?
Saving for an emergency fund is worth the hassle in the long term. Emergencies are highly unprecedented and knock-in without warning. It leaves you crippled, oblivious of the next step to take to get you out of the mud. Aim to save enough for your emergencies and prevent getting stranded in the future.
At Fundo, we offer cash loans to help you deal with any emergency when the need arises. Apply for a loan of up to $2,000 today to quickly help you stay in balance.
Disclaimer: The opinions expressed in the Blog are for general informational and entertainment purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific investment product. It is only intended to provide education about the financial industry. The views reflected in the commentary are subject to change at any time without notice.