If you don’t have an emergency fund, you could be vulnerable to unforeseen expenses that could tip your life off-balance. For example, if you’ve ever had a car break down, you’ll understand that roadside assistance and emergency repairs can be really expensive, even if you have insurance.
If you’d like to build a bigger buffer for emergency situations, these tips will help you create a little extra space in your finances, so you’re ready to pay up when a serious need arises.
Refinance Your Loans
When you take out a loan, you don’t always take everything into account that you should. If you struggle to make ends meet because you’re paying off high-interest loans, it might be worth consolidating or refinancing them so you have lower interest to pay. A big student loan is a great candidate for refinancing. The trick is knowing which lender to go with, based on your unique loan and financial situation. It’s useful to use a trusted aggregator site. For example, Biglaw Investor writes: Credible is a great option if you want to check multiple lenders when refinancing your student loans. Securing a loan refinancing option that is perfectly suited to your needs could be a great way to free up your monthly income and start building an emergency fund.
Reassess Your Monthly Bills
Monthly utility bills offer a good opportunity to cut down on regular expenses. Even if you think you’re with a low-cost provider, research has shown that the best way to save money could be to switch to a new provider. Call your service providers for services like the Internet, T.V and mobile phone, querying whether they offer a more cost-effective deal that you could switch over to. You never know: they may have launched new deals or cost-effective service bundles that include precisely what you require for a lower cost than your current plan. If not, try switching to a new provider. A few tweaks to your monthly utility bills could add up to significant savings for your emergency fund.
Create An Emergency Fund Bank Account
As you watch the funds growing in your emergency fund (honestly, they will!) you may feel the temptation to spend the money on other things that you want but aren’t strictly necessary. The point of an emergency fund is to reserve the funds for emergencies. What’s the use if you are able to dip into the money for things that aren’t classed as urgent? The most effective way to beat this temptation is to create a separate bank account for the emergency fund, instead of saving your money in a jar, or even trying to keep track of what proportion of the funds in your current account has been “set aside” for emergency situations. Allocating that money to a separate savings account ensures that your emergency money remains safely ‘out of sight and out of mind.” Say goodbye to pay-day splurge temptation and hello to long-term security, thank you very much!
No matter how much you earn every month, you may encounter the occasional emergency that requires immediate remedy. Whether it’s a burst pipe, and illness, or an urgent overseas visit, some situations simply can’t wait, meaning you’ll have to go into debt if you don’t have the money available. These tips will help you build up a decent cushion for those unforeseen circumstances.