If you don’t have a lot of spare money on hand, building up an emergency fund might sound near impossible. Thankfully, that isn’t the case.
Here are a few tips on how you can get creative about building an emergency fund from seemingly nothing.
If you’ve recently got a tax refund or a stimulus payment, consider setting it aside in savings if possible. Sometimes when we have surplus money on hand, we imagine all of the things we could purchase with it.
However, saving it for a rainy day can be far more beneficial, and you might be surprised at how quickly the amount can grow over time.
One trick you can try is to put the money in savings and give yourself at least three months before you touch any of it.
This can help to prevent you from making impulse purchases that you might regret later on.
Sometimes it is far easier to save money when you don’t have to think about it. If the money isn’t in your checking account, you’ll be less likely to spend it.
Set up a certain amount to be automatically transferred to your savings account each month. Opt for a high yield savings account.
Even if you can afford only a small amount, it can still grow over time.
Pay attention to how you’re spending your money. For one month, try to cut back on any unnecessary costs, and to try to live as sparingly as you can.
This can help you in two ways. Number one, it can help you learn how to avoid overspending, and number two, you can place the surplus money in savings.
While you might think you should avoid using credit cards, using them responsibly can be highly beneficial. Don’t overspend, and make sure that your payments are met on time. You’ll also want to pay more than the minimum each month.
Choose credit cards that offer cash-back, and put any rewards given directly into savings. Cash-back cards can help you earn money as purchases are made.
Many banks offer generous sign-up bonuses when you open a new savings account. These generally range from $100 to $300 and can be a great way to get a head start on saving money.
Just be cautious if you take this approach, however. You shouldn’t open new savings accounts willy-nilly. If you open more than one, make sure that you write them all down on a piece of paper to help you keep track of them.
You should also be on the lookout for any fees, and keep in mind that the earnings are taxable.