9 tips for creating an emergency cash reserve
Nothing is guaranteed in life, in particular with regard to finance. And large unexpected expenses can occur at any time, especially when a country is affected by the coronavirus pandemic and is at the beginning of a recession. Writes about this Money Talks News.
How to create your own personal emergency fund?
1. Set a goal
Setting clear and realistic goals is the first step towards implementing important plans. Based on the amount of your salary, to create a reasonable goal for savings. Visualize your goal and track progress along the way.
Start slowly, stay calm and watch your stock of money grow gradually. Avoid the temptation to use the fund for any reason other than emergency situations. You will be surprised how having this small self-made insurance policy gives you extra peace of mind.
2. Tell us about the fund.
Let friends and family know that you are working to achieve a financial goal. This helps to get support.
There is no need to reveal your innermost financial secrets - just let us know what you hope to save by skipping a few lunches together.
Success is contagious, so don't be afraid to talk about how things are going. You can inspire others.
3. Delay change
Although this may seem like a painfully slow and bizarre strategy, our parents and grandparents knew how to save a dime at a time. Start a new habit of paying daily purchases exclusively in cash.
Put the change in the bank and let your savings grow in the old fashioned way.
4. Find extra income
If you have skills that can be implemented as a freelance employee, consider creating a part-time business to partially replenish your account. Perhaps working in the evenings or on weekends can help you save money quickly.
Do not lose sight of the goal: accumulate everything that you earn.
5. Sell excess
Take a moment to look around: are you sitting in a house or office filled with extra stuff?
Mentally stick price tags on all this old clothes, unused electronics, dusty video games and bicycles. Sell them on eBay, post them on Craigslist, have a sale in the yard to turn trash into money. And put the money you make into your emergency fund.
6. Rethink your 401 (k)
Temporarily reduce your 401 (k) installments to a minimum amount. Send extra money to your fund.
7. Put aside
If you are fortunate enough to receive a pay raise or a one-time bonus for a job well done, consider adding extra cash to your emergency fund.
8. Refill your account from returns
Annual tax refunds seem like a good thing, but too much deduction from your paycheck means that you give the government interest-free credit for a year.
This is not a good financial strategy. But if you are committed to it, at least be sure to make the most of your tax refund. Instead of planning a weekend shopping trip, save money, transfer savings to your account to accrue interest in case of emergency.
9. Work overtime
If you have opportunities for overtime, use it strategically to create your emergency fund. Keep track of your overtime hours and transfer this amount to your savings account. When you reach your goal, cancel overtime or tune in to your next financial goal.
Creating an emergency fund from scratch requires perseverance and discipline. But, as with any targeted project, you will be surprised how inspiring small successes can be.
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