How to Build an Emergency Fund with FCU
You saved diligently, kept a smart budget and built a solid emergency fund – and then the unexpected happened. Financial experts agree that you need to keep a fund of about 3-5 months' worth of living expenses available in an account designated for unforeseen emergencies; but what happens when you’ve had to wipe yours clean?
First and foremost, remember that things could be a lot worse! Your preparation kept you out of debt, and you should congratulate yourself for your good planning. However, you’re now in a situation where a small issue – like a blown tire, a missed shift or a sudden illness – could cause serious financial hardship. To get yourself back on track, focus on these three methods to rebuild your emergency cushion:
Make an emergency budget. It may not be fun, but cutting out inessential expenses can help you rebuild your fund, fast. Consider suspending your cable for a few months, or even trying public transportation. Those small, and big, differences can add up quickly. Also, any funds you were funneling into different savings piles, like for a vacation or new car, should go back into your emergency fund until you’re back on solid ground. Of course, any budget you set should be realistic and maintainable - if you're going to blow your budget each month, you should probably adjust it to be more manageable.
Increase your income where you can. The other way to build your emergency fund is to increase the amount of funds passing through your bank account. Whether it’s through extra shifts, asking for a raise, or swapping extra hours with co-workers, increasing your paycheck will increase your savings. If those aren’t options, try picking up income in other places, like freelancing or selling old stuff around the house.
Develop a backup plan. What would you do if, right now, a crisis were to hit? Money may be tight, but being prepared with last resorts can give you some extra peace of mind. Make a list of phone numbers, from temporary work options to others in your network, that could point you in the right direction. Think about who could potentially give you a quick loan, or what belongings around the house you could sell for quick cash. Hopefully, you’ll never have to lean on these last-resort ideas, but knowing you can handle any tough situation will certainly improve your sleep!
Florida Credit Union is committed to helping our members maintain their financial stability, and with a well-managed emergency fund and a few financial education courses from our experts, you'll be ready for whatever comes your way.
Have more tips for building an emergency fund? Let us know in the comments below!
Like this article? Check out this similar post: "Rainy Day Fund: Save for Emergencies"