Creating an Emergency Fund Smartly

Unexpected expenses are a part of life. These expenses can have a huge impact on our current budget and future goals. Sometimes these overheads can even cause significant damage to our wealth. Thus, we should create an emergency fund depending upon our income and possible risk factors. You have to maintain a backup to cover sudden expenses.

Let’s understand the most practical ways to kick off a sustainable emergency fund.

Have smaller goals

You don’t have to be super conscious about your expenses to create an emergency fund. All it sometimes takes is a habit of making smart financial decisions. You will save money for your emergency fund as long as you put your income to the best possible use. In addition to your usual savings you plan to put away from your salary, you could try to cut down spending in other smaller ways. For example, if you’re buying a coffee everyday, why not try and cut this down to one or two days per week instead. Or start making your own lunches instead of always eating out. If you run the heating a lot, you could take a look at this article on Romeo’s Fuel and give a couple of the tips on there a try. By changing small lifestyle habits like this, you could be surprised by the small fortune you could end up saving.

Sell unnecessary things

The easiest way to kick start your emergency fund is by selling unwanted things in your house. A single look at your home will reveal a lot of things that do not provide any productive value to you, for example- unused exercise equipment, old gadgets including laptops and tablets, and toys which your kids have now outgrown can all be sold for a surprising amount on websites such as eBay. The instant cash will boost your savings, and you will recognize a substantial increase in your emergency fund.

Look out for one time incomes

An emergency fund can be enlarged by adding in a few onetime incomes. These income sources are not regular, but they do provide a quick boost to your funds. You should use every opportunity to earn those odd bucks like online surveys and caring for pets.

Get another job

The majority of people hate the idea of spending their extra time in another job, but it can be a boon for your finances. Your alternative job doesn’t have to be high paying as it is only fulfilling the task of extra funds collection. It is focused on revving your savings without further cost-cutting. Your hard work will pay for your dues in critical situations while you deal with the expenses. Of course, it’s always important to consider work-life balance when getting a second job but if you feel you can find the time for another job, then it can be a great way to achieve extra income.

You should develop a sound perspective towards money to lessen the chances of financial instability. If you do find yourself in need of a small cash boost, you could also apply for a same day loan if your emergency fund is not able to cover that unexpected expense. As with any form of credit though, you should be sure that you’re in a stable enough financial position to be able to make the agreed repayments.

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Tim Spafford

Tim is a student who works hard to get a degree in finance and build a successful career in business consulting. Being a student and living in London Tim has a real-life experience in budgeting, saving, money making, traveling and having fun.