Learning how to build an emergency fund proves useful later on when finances are tight, and getting a loan is difficult, especially for people with bad credit. So, we have nine ways to get you started.
Saving an emergency fund of at least three to six months of your expenses is a great way to stay financially secure in uncertain times. Read on to learn nine ways of building an emergency fund now!
How to Build An Emergency Fund: 9 Ways
1. Reassess Your Budget
One trick to building an emergency fund is to reassess your monthly budget. The best way to begin is to create a list of all your income and bills for each month.
Writing out this information will help you see clearly where your money is going each month. On the ‘bills’ side of the page, write down your monthly must-haves and extra expenses.
Are there any unnecessary expenses that you can do away with? Look for magazine subscriptions, streaming services, or other things you don’t need.
Don’t let a bad credit score stop you from finding ways to save money!
2. Start a Side Hustle
A second option in regards to how to build an emergency fund with bad credit is starting a side hustle. Did you know that 43 percent of full-time workers in the United States have a side job? This extra work can help you save money for an emergency fund, pay off debt, and more!
Do you have an interest or exceptional talent you can monetize somehow? For example, you may work full-time for a bank and be a talented writer. Look for freelance opportunities that pay you for your work.
This extra money you earn in your side hustle can be put into a separate account you use to build up your emergency fund!
3. Setup Automatic Deposits to Savings
Another strategy for building an emergency fund with little effort is to set up automatic deposits to your savings account. This makes your deposits like having automatic bill-pay as you would for a car payment or electric bill.
For example, when you prepare your budget, how much money is left over at the end of each month? What percent of that money do you need to live on, and what can you save?
When you decide on the amount you can save, send that money to your savings account automatically each month. This is how to ensure that there’s money flowing each month, and you will build an emergency fund, without doing a lot of extra legwork.
4. Pay Off Credit Card Debt
Consumer debt, such as a large credit card balance, can be crushing financially. The average American has $6,194 in credit card debt! With high interest rates and other service charges, carrying a balance on your credit card can keep you in debt for a long period.
Look for ways that you can begin chipping away at any balances on your credit cards. Minimizing your debt first is how you dig yourself out of your financial hole, improve your credit score, and set aside money to build an emergency fund.
It may also be beneficial to consider using a certain amount of money each month to pay off credit card debt and sending the rest to an emergency fund account.
5. Save Raises
It’s nice to earn a raise at work, but that doesn’t mean you have to spend it! Saving your raises is an effective strategy for building an emergency fund without necessarily changing your lifestyle.
For example, if your take-home pay increases 10 percent from $3,500 each month to $3,850, what will you do with the extra $350? Instead of increasing your expenses by that amount, consider sending that $350 straight to savings.
At the end of each year, you’d have $4,200 in your emergency fund account!
6. Clip Coupons or Save Email Offers
Saving coupons and email incentives is a fun way to keep money in your pocket and put it towards your emergency fund. Do you receive a copy of the newspaper each day? If not, going online can be a great way to go green while saving on your expenses.
What are some of the products that you buy each month? While many of these products may not go on sale at the store, special savings coupons may be available online or by signing up for an email list.
The money you save can be sent to a separate account you don’t touch unless there’s an emergency.
7. Sell Your Stuff
Selling the things you don’t need or use is a great way to turn your junk into money and can be a great first step when you’re working on how to build an emergency fund. One of the best ways to prepare for this is by cleaning out each room in your home.
As you go through these items, do you use them regularly or expect to use them in the next few months? If the answer is ‘no’ to both of those questions, it may be time to have a yard sale or post it for sale online, so you can start building an emergency fund.
Besides helping to keep your home free of extra clutter, you will turn your useless items into cash!
8. Find Ways to Lower Your Bills
When you prepare your list of monthly bills, you may find specific bills you can’t live without. Based on where you live, you may not have a lot of control over the company that provides electricity and water.
That’s not the case for many other bills. If you have service through certain companies for things like car insurance, internet, and cable, have you looked at the price charged by their competitors?
Spending time to look at the price of competition can present great opportunities to cut back on your monthly bills! It may be time-consuming, but it is a sacrifice worth making in regards to how to build an emergency fund.
9. Bike or Walk More Often
Driving a vehicle is convenient, but that doesn’t mean you always need to use it. Biking or walking instead of driving to places near your home or office is a good way to exercise while also spending less money.
Instead of using gas and putting mileage on your vehicle, you can get some fresh air and walk to a store or restaurant. When you cut down your transportation costs, you can put this money into building an emergency fund!
How to Build an Emergency Fund: Final Thoughts
You can build an emergency fund whether your credit is good or bad! By reviewing your financial situation, you can find ways to cut down on your expenses and begin to save money. However, if you find saving hard, consider getting a Minute Loan Center line of credit to get emergency cash when needed, and pay off the balance in installments.
Need Emergency Funds?
Minute Loan Center also offers other fast-processing loans that you can take out in case of an emergency. Our lending requirements are easy to ensure that you access the money when you need it. Contact us to start the loan application process. A customer service representative will contact you promptly.
Lastly, check out our blog section for more resources, like our post on how to build good credit with a personal loan, and other resources on how to build an emergency fund for the rainy days. We look forward to working with you and helping you get the financial help you need. So, go ahead and apply for a loan!
Kevin brings over 15 years of experience in marketing, with a specialized expertise in growing online businesses. As the Director of Marketing at a leading FINtech company, he employs innovative strategies to enhance brand visibility and customer engagement. Kevin’s passion lies at the intersection of technology and finance, where he pioneers solutions that not only meet but exceed consumer expectations. His commitment to leveraging his expertise ensures impactful results and the building of lasting relationships in the digital landscape.
