One of the things that is most important for every one of us is money. It’s sad to say, but money often makes the world go ’round and for this reason building an emergency fund is vital to keeping your financial picture in focus. You might think that building up your savings is not something for you – maybe you’re “not old enough” or “not able” to do something like that. However, at a very early age building an emergency fund is something which all of us should do. Here are some steps to start building this type of fund from the ground up:
Be Realistic: One of the biggest caveats for folks hoping to set some money aside is they think, “I don’t have any money to save!” After rent, gas, food, credit cards, student loans, cable, internet, phone, electricity and everything else you buy in a month, you might think something like an emergency fund is impossible. However, you can likely cut out some of your unnecessary expenses each week: your morning stop at your favorite coffee shop, an afternoon trip to the convenience store, or dining out. The money you would typically spend on these small purchases can be converted into your emergency fund. You have to realistically decide what you can afford to put away and not touch before you can start at all.
Start Small: Once you’ve committed to an amount you’d like to save, you then have to start saving. Start small and stay committed. You might have weeks where you are not able to put any money away. That’s okay, but don’t give up! Your emergency fund is going to be there for you when you need it, so make sure you don’t lose focus.
Build It Up: Once you have gotten into a good routine of saving more and spending less then you can allow yourself to build up your savings. Maybe you’ve been putting away $15 a week. Why not challenge yourself and try to save $25? Adding a little bit each time you are saving this money will only make you become more careful when it comes to your spending habits.
Make It Accessible: Once you have built up your emergency fund – whether it’s in a coffee tin at the foot of your bed, or in a starter savings account – you must make sure you can actually access it in case of an emergency. Rather than tying this money up in investments or a savings account that you don’t have direct access too, keep it in an account that is easy to withdraw money from when a true emergency occurs.
Something we should all have on our mind when it comes to our finances is building an emergency fund. You never know when your financial picture is going to take a turn for the worse and having an emergency fund to draw from will bring you peace of mind.