An emergency fund is an essential safety net that everyone should have sitting in the bank. It can help you handle urgent, unexpected expenses and major life upheavals.
Without one, you might be at a loss on how to cover an emergency expense without disrupting your ability to pay the bills for the rest of the month.
The rule of thumb is that you should save three to six months’ worth of income in your emergency fund. That amount can help you immediately cover small emergency expenses, such as car and home repairs. It can also help you stay afloat for weeks when your regular income isn’t available (for example, if you lose your job).
How can you get your emergency fund from empty to full?
It will take time and dedication, but if you want to speed up the process, you should read these tips for boosting your emergency savings.
1. Automate Your Payments
Your emergency fund won’t grow very quickly if you keep forgetting to add to it. How can you stop your contributions from slipping your mind? Automate your money transfers from your checking account into your savings account through your online banking. This way, you’ll build up your fund without thinking about it.
2. Increase Your Income
If you’re impatient for your emergency fund to grow, you can try to increase your income so that you can make bigger contributions every month. How can you do that? Depending on your current job, you could ask for a pay raise or take on more overtime hours to bulk up your upcoming paychecks.
You could also take on a side hustle, like selling second-hand items online in your free time. You’d be surprised by the profits that you can rake in!
3. Use Your Windfalls
Sometimes, you’ll be lucky enough to get a windfall, like a generous workplace bonus or a relative’s surprise inheritance. Take advantage of this sudden influx of funds!
You don’t have to put the entire windfall into your emergency fund, but at least put a portion of it there. It will instantly give your emergency fund a big boost without too much effort on your part. You’ll get one big step closer to your savings goals.
4. Change Accounts
After you’ve accumulated significant savings in your emergency fund, you should consider moving the total into a high-yield savings account. A high-yield savings account offers an interest rate that helps your balance grow steadily, making your safety net more secure over time.
It’s time to build and boost your emergency fund. The sooner that you fill it up, the better.
