The 3 Simplest Tips to Build Up Emergency Savings
If you're a regular reader of our blog, you've likely noticed we post a lot about savings. And guess what... here's another one. The reason we do it is because emergency savings is one of the most important aspects to being stable financially.
This time I'm talking specifically about building up savings in case of emergency. Emergencies look different to people, so for more info on that, read What is a Financial Emergency.
For at least 15 years I've been setting aside money directly from my paycheck into a separate savings account. The money is automatically deposited so it's super easy to do and it's also out of sight and out of mind. I highly encourage you to check if it's an option with your employer — if you haven't already.
Only Use for Emergencies
I'm one of those people that when I have cash, I'll find a way to spend it. So first off I try never to have cash. Regarding savings, I don't touch that money unless I absolutely need it; having the cash in a separate account is key for me.
Be Creative to Increase Savings
Years ago my husband and I had to replace our refrigerator with no indication it was dying. Instead of putting that new appliance on a credit card, we used our savings fund to avoid accruing debt. While that felt good, I was also nervous because our savings balance was now a little low.
So to build it back up a little faster, we were creative. We made some cuts on the little things... dining out, Target/Walmart trips, and we saved our change. You could also try a savings challenge. Do whatever works for you and you'll be surprised how easy it is to spend a little less to build (back) up savings — especially when you have a goal. If you're a goal oriented person, pick a number to shoot for in the beginning and that will help a lot.
Emergency savings is one of those things that won't happen unless you're intentional about it. So make it intentional and make it a habit. If you do, you'll be prepared for that rainy day or financial bump in the road.
If you'd like to save more, but credit cards are getting in the way, LSS can help. Call us today at 888.577.2227 for your free financial counseling session or click to GET STARTED ONLINE. Our counselors will give you options to pay your debt off faster and save money.
Author Elaina Johannessen is a Program Director with LSS Financial Counseling.