Personal Finance 101: How to Build Your Emergency Fund

Earning your own money for the first time can be an exhilarating experience. You no longer have to ask your parents for money, and you’re finally able to buy the cool things you want. And while there’s nothing wrong with a bit of fun spending money, it’s a good idea to have some savings in case of emergencies.

If you’re going to put all your eggs in one basket, make sure it has a really strong handle. Building an emergency fund is important because it lets you deal with unexpected financial problems, but it can also be difficult to do.

The usual rule for emergency funds is to have three months’ worth of expenses saved up because sometimes, things happen out of your control. With some extra planning and creativity, though, saving money for a rainy day can be much easier.

Here are nine tips you can use to help with your savings plan:

1) Set Up an Automatic Transfer

Having the money go directly to your savings account will keep it out of sight and out of mind, so you won’t be tempted to spend it. If you don’t already have one, open a high-interest savings account. This way, your money will grow over time.

2) Find Out When Your Favorite Store is Having a Sale

If you know when your favorite store is having a sale, you can plan your shopping list accordingly. Make a note of the days and schedule your errands to hit those days. The more you can save, the better. If you make it part of your routine, you won’t even miss it.

3) Make Sure Your Bills are Paid on Time

Paying your bills on time is a way to demonstrate you’re a responsible adult and can help others trust you in the future. While some banks will charge a late payment fee, it’s not hard to avoid them by checking when payments are due and setting up automatic transfers from your checking account to your bill pay.

4) Pay Attention to Your Spending Habits

You may not be able to cut out all of your expenses, but if you can identify unnecessary spending habits and cut back on them, you’ll put yourself in a better position to save. Plus, if you can reduce or eliminate regular spending, it may make you more likely to notice small changes in your checking account and catch any unauthorized charges.

spending money

5) Consider Diversifying Your Income Sources

While you don’t want to spread yourself too thin, having additional sources of income can be an extra cushion for your savings. Even if it means working a little harder, saving more is well worth the effort. For instance, you can be a private English teacher to kids who need help on the weekends. Or you can dog-sit your friend’s pet when they’re away.

6) If You Can Do It Yourself, Don’t Pay for Someone to Do it

It may make sense to hire help for some things, but if you can do something yourself, don’t pay someone else. For example, instead of hiring a professional cleaner or paying your neighbor kid to mow the lawn, grab a broom and get on with it.

7) Cut Back on Subscription Services

If you subscribed to many different services, chances are you might be spending more than you realize. Take a look at your monthly statements and see what subscription services you don’t use anymore. Then take the time to unsubscribe.

8) Be Creative with Your Savings

You don’t have to be super frugal all the time, but if you can somehow make your savings work harder for you, go right ahead. For example, if you have a spare change jar, you can take it to the bank and have it rolled. If you save up enough money doing that over time, you’ll be able to buy something big — maybe a new laptop or a piece of furniture for your living room.

9) Don’t Panic, Plan

Sometimes it seems like a lot of these tips aren’t going to make a difference. That’s why you need to plan them first, then follow through on those plans. If you have a friend that’s good at saving money, ask them how they do it so you can pick their brain. It might be able to give you some much-needed motivation.

Saving money for a rainy day can be difficult. But with a little planning and creativity, you can do it! Using these tips will help you find ways to save more money so you don’t have to worry about an unexpected expense when it pops up. Use them together or one at a time; it’s up to you. Just remember, the most important thing is to be committed so you can accomplish your goals.

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