You never know when you might lose your job, have to replace your car, or find yourself stuck with an expensive repair you can’t put off. This is why it is so important to have a solid emergency fund.
Ideally, you should have enough money in your savings account to cover three to six months of essential living expenses – things like your rent, car payment, utility bills and food. But according to 4th annual report of Salary Finance, nearly a third of American workers do not have at least $1,000 in liquid savings or a reserve of cash in their checking accounts. And this percentage rises to 41% among those who consider themselves financially stressed.
If you don’t have $1,000 to fall back on, you’re potentially one emergency away from landing in debt or suffering other unwanted financial consequences. Here are some steps you can take to increase your savings.
1. Reevaluate your expenses
Maybe you really did your best to minimize expenses and only spend money on the essentials. But if you haven’t tried cutting fat yet, give it a try.
Go through the recent bank and credit card statements to see what your monthly expenses look like. Next, identify the areas you can reduce. This could mean canceling the cable and replacing it with a streaming service one-fifth of the price.
Once you’ve done that, set an actual budget so you can account for every dollar you spend and earn. And be sure to put a line item in your budget for savings so that money lands in the bank each month as your paycheck comes in.
2. Bank all the deals you get
You can earn extra money during the year. Many people have recently filed their taxes, for example, and are only doing waiting for their refunds. This is money you could save to increase your balance.
Likewise, you might receive a bonus at work or a cash gift from a relative on your birthday. You might even win a cash prize at some point, for example by entering your kids’ football team raffle. Even if it is a small amount of extra money, it is worth putting it in the bank.
3. Get a side job
Your salary from your regular job can be maximized, especially these days when inflation makes the cost of living so expensive. But if you take a side hustleyou can use your extra income to increase your savings and provide emergency protection.
There is a lot of, numerous side hustles you can choose from, so a good bet might be to set a specific income goal and then find a gig that matches that. If you want to make $60 a week to grow your savings at a decent rate and can make $30 an hour tutoring, you can try to schedule two hours of free time each week to achieve that goal.
You may not yet have a full emergency fund. But if you don’t have enough money to cover an unexpected $1,000 expense, that means you have work to do. Use these tips to grow your savings and get the peace of mind you deserve.
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