5 Ways to Grow & Manage Your Emergency Savings Fund
Emergencies – they’re an unfortunate fact of life. And if there’s a financial burden attached to an emergency, that can make things all the more stressful.
Whether it’s a problem with your home, your vehicle, or your health, most financial experts agree that you should have some money specifically put aside for a “just in case” fund.
That sounds easy enough, but in reality, we all have our financial commitments – and it can be really tough, psychologically and logistically, to find money to put aside for some unspecified time period, for some unknown purpose. So with that in mind, here are a few suggestions on how to get your emergency savings fund rolling, and some tactics to keep building it up over time.
1. Make Use of Auto-Deposit: Set up auto-deposits through your bank so that the money transfers into your emergency account as soon as you receive your paycheque. Out of sight, out of mind, right? This ensures that you’re making steady contributions to your emergency fund, growing it over time, while minimizing the effort on your part… and eliminating the feeling of “loss” from consciously taking money out of your paycheque.
2. Make a list of monthly expenses and see where you can trim costs a bit. Most of us probably have monthly costs in our life that we can look to reduce, if not eliminate entirely. Maybe you’re paying for more Internet usage than you use. Or you could stand to live with a reduced cable package – or live without it entirely. Perhaps you could eat out at a restaurant once every 2 weeks instead of once a week. Or maybe you bought a gym membership in January but aren’t using it in November.
Whatever the case, the idea is not to sacrifice any aspect of your lifestyle that you enjoy; it’s to put away a little bit at a time to set up a cushion – so that when something unforeseen happens, you’re still able to live that enjoyable lifestyle.
3. If you find it difficult to give up some of your monthly costs, try renegotiating. Companies want your business, and consumers have a lot of power in this day and age. As an example, there’s a possibility that you may be able to reduce your monthly cable or internet costs, perhaps by locking into a specified term. Use one of the many money saving/coupon apps available (such as Flipp) to help reduce your monthly grocery bill. Take a bit of time to shop for a better cell phone plan, and go back to your current provider to tell them that you’re paying too much. You might even be able to negotiate a lower interest rate on your credit card. Use the savings from renegotiating your deals towards an emergency savings fund.
4. Take care around the house to reduce energy costs. There are some things you can do inside your own home; use the “found money” from the savings to apply towards an emergency fund!
- Many homes have air leaks around windows, doors and other openings. Checking for this once a year can be a big long-term money saver, wasting less energy (here’s a nice guide on checking for air leaks yourself ).
- For many people, lowering your thermostat even one degree from during the winter, or keeping the air conditioner one degree higher during the summer can add up to big cost-savings over the course of the year.
- Be a little more mindful of waste from little things around the house, like leaving the lights on when nobody’s in the room, or running the dishwasher when it’s only half-full.
5.Clearly define what constitutes an emergency. Some people just can’t stand the idea of money sitting there in a savings account, and will jump to use it at the first sign of a problem. If it helps, write down exactly what constitutes an emergency, so you’re not tempted to dip into your emergency fund when the situation is not exactly dire.
Need More Financial Advice?
Speak to your local financial advisor at Oegema, Nicholson & Associates Financial Inc. They will take the time to get to know you as a person, assess your needs and put you on the path to financial freedom.
Thanks for reading,
The ONA Team.