Life is full of surprises. While we think we’ve figured out how events will unfold, surprises do show up and interrupt our otherwise predictable lives.
Some surprises are pleasant–like bumping into an old friend. These surprises add value to your life. They enhance your lived experience. Unfortunately, not all surprises are pleasant, particularly those we don’t have the money to cover. Something might break down; something that needs to be repaired immediately. For example, the starter in your car fails right when you’re running behind and need to rush to work.
Although you can’t control the future, you can take steps to mitigate financial setbacks. If your car doesn’t start in the morning and you’re between paychecks with only enough money to pay for food and gas, you can always get a quick loan from an online lender. However, rather than settling for a payday loan, it’s better to find an alternative to payday loans, as these allow you to get as much as $1250 quickly and pay the money back in installments. What’s more, all you need to qualify for the money is a verifiable source of income, an active checking account, and a social security number.
Still, while there are fast and flexible ways to take care of small financial emergencies, it’s always a good idea to create an emergency fund for those times when you need a large amount of money to resolve a huge problem. For example, when you have to pay out-of-pocket dental expenses before you can get reimbursed by your insurance company.
What is An Emergency Fund?
If you were to set an appointment to see a financial expert, one of the first questions they would ask you would be if you have 3, 6, or 9 months’ worth of living expenses saved to cover an emergency. Obviously, the longer your savings account will cover you, the better. To put this in perspective, if you spend $2,000 a month to cover your living expenses, you’ll want to have a financial cushion of $6,000, $12,000, or $18,000 should you suddenly be out of work.
So, how do you acquire this money? The first thing you need is to do is to decide to create an emergency fund. Without a firm decision to act on this idea, it will merely be a good idea that you’ll tuck at the back of your mind, filing it under the “someday” folder. The second thing you need to do is start where you are with what you have right now.
How do You Start an Emergency Fund?
Spend less and save more. Think about what you can spend less money on when you go shopping. Perhaps, you’re spending an unnecessary $20 a week on groceries and household items. If you were to put this money into a savings account that would be $80 a month.
Next, review other things you spend money on. It could be going out to lunch because you’re too tired in the evening to prepare a meal to take to work the next day. You might be surprised to discover that you’re spending an extra $30 a week on fast food. Since you’ve already saved $20 by slashing your grocery and discovered another $30 on unnecessary dining expenses, you can now tuck $50 aside a week. This means that your monthly saving has blossomed into $200 a month.
Finally, find a side hustle. Besides spending less on things that you don’t really need, consider the idea of earning a little more money by taking on a side hustle. For example, you could learn how to sell things on eBay.
Think of the Big Picture
Here’s the thing: if you’re ever faced with a large unexpected expense, you’ll breathe a sigh of relief because you have an emergency fund. You’ll spare yourself the angst of trying to find the money necessary to cover the expense.
Although penny-pinching isn’t fun and sacrificing some of your much-deserved free time to start a side-hustle may not excite you, think about what it would mean to have money set aside for an emergency. If you received a pink slip from your employer tomorrow, you wouldn’t panic if you had $6,000 or more set aside.
This is great advice. I’m working on getting a fund together now. Thanks for posting!