Flat tires, hospital bills, getting laid off- how do you keep up with your bills when these kinds of unexpected life events happen?
It’s stressful trying to catch up to financial burdens that continually pile up. Here are some tips to help you handle these emergencies like a pro without missing payment deadlines or going into debt.
Set Savings Goals
To start your emergency fund, try setting a savings goal of $1,000. Having this money on hand can lessen the severity of a financial crisis so that it feels more like an inconvenience. It creates a safety net so that you don’t have to worry as much when inevitable mishaps occur.
After you’re able to save your first thousand, it’s wise to gradually build a savings account containing three to six months’ worth of expenses. Doing so will help sustain you in case you face the unfortunate possibility of unemployment. If you have several months’ worth of funds, it’s much less scary to pay bills and expenses between places of employment.
Save Extra Cash
When it comes to savings, little sums of money can add up quickly over time. Even if all you have to spare is $10, it’s worth adding to your designated savings account. Consistently building your emergency fund will help grow your savings.
You can even dedicate the money you earn from a side hustle toward your savings. Whether you sell handmade products or you work a part-time job, the extra cash flow that you earn through work is essential to creating a financial cushion for yourself.
It’s important to understand Before paying for an expense with these funds, financial expert Dave Ramsey suggests that you ask yourself the following questions:
- Is the expense unexpected?
- Is the purchase necessary?
- Is the payment urgent?
Answering yes to these questions help to justify using your emergency fund. Because it is supposed to act as a safety net, you want to make sure that you’re not spending your emergency savings without carefully considering the situation.