July 5, 20205 Ways to Build Your Emergency Fund
Car repairs. Medical bills. Sudden job loss. These unexpected expenses unfortunately pop up from time to time. Putting aside three to six months of living expenses into an Emergency Fund should be at the top of everyone’s financial to-do list.
However, that isn’t the easiest thing to do. Could you use some guidance? If so, here are five tips to help you boost your emergency fund without drastically changing your lifestyle or finances.
#1: Payroll Deduction
The best way to jumpstart your emergency savings is with payroll deduction. This service allows you to designate a certain dollar amount to be transferred to a separate savings account every time your paycheck is deposited.
#2: Automatic Transfers
Automatic transfers are very similar to Payroll Deduction, but instead of your deducting from your paycheck, you set up a specific time each month for money to be transferred between your bank accounts.
Some employees receive a bonus once or twice a year. This is an excellent time for you to boost your emergency fund. Even if you are relying on that bonus for other financial obligations, try to put at least a portion of it into your savings.
If you receive a pay raise, instead of using those funds in your budget, put them towards increasing your emergency fund. Just increase your payroll deduction or automatic transfers to match the extra money in each paycheck. This will help your emergency savings grow even faster.
#5: Tax Returns
As a bonus, your tax return may be unexpected extra income. This year designate a portion of your return to your emergency fund, then use the rest as you wish. It’s all about creating balance when you receive large lump sum deposits, such as tax returns or bonuses.
What are some tips you have for starting your emergency fund? Share your strategy in the comments!
Each individual’s financial situation is unique, and readers are encouraged to contact PEFCU when seeking financial advice on the products and services discussed. This article is for educational purposes only; It does not constitute legal advice. If such advice or a legal opinion is required, please consult with competent local counsel.