Remember your first paycheck?
Do you remember where you spent it at?
Now, I'm pretty sure you quickly spend it and never thought about debt and starting an emergency fund, but hey you weren't alone.
Fast forward to now and if you have debt and have no emergency fund then we are here to help you out.
If you are looking to take control of your finances and get out of debt start an emergency fund.
Don't have debt start an emergency fund to help you keep away from debt, my friends!
You heard right start saving money.
You will be surprised how saving money for unplanned events will help you reduce your debt. If you have debt and do not have an emergency fund read why you need to have an emergency fund.
Reasons to Start an Emergency Funds
Not having an emergency fund will cost you more money.
If you don't have the funds to pay for an emergency, is going to cost you more money. It becomes a cycle where millions of people seem to fall into every day.
Your car breaks down and you don’t have money saved. What do you do?
Not having money to fix your car you decide to charge it to your credit card.
Credit card will charge you an outrageous amount of interest if is not paid in full.
Paying minimum balance on your credit card debt is going to cost you a lot of money in interest and it will take years.
If you don't use your credit card and use a cash advance place, you will pay fees and interests as well. This is going to cost you a lot of money and sometimes creating more financial problems than solutions.
Deciding not to pay one of your bills and use that money to pay for your car service bill, you will pay a late fee for not paying your bill one time. The amount you didn’t pay will double the following month as well.
A service reinstated fee could be added to services if services are shut down. Again, wasting your hard earned money and your level of stress continues.
Do you see the effects of not having an emergency fund?
Credit cards, cash loan services, and not paying your bills are no ways to pay for emergencies. An emergency fund is what you need to pay for the unexpected. Saving money is free and stress-free.
Credit cards are NOT emergency funds!
Check out these money posts:
- 10 Things You Shouldn't Buy When You Are Struggling Financially
- If You Act Like This, You Are Not Wealthy, You Are Broke
- 4 Destructive Broke Mindset Beliefs People Need To Get Rid Of
How much money should you save?
An emergency fund amount varies. Experts always suggest having an emergency fund to cover 3-6 month worth of expenses.
If you are low income I suggest reaching for $500 until you have your finances under control and increase it to $1000. Remember that anything is better than nothing.
Set an amount that is good for you. If you think $5000 will help you through 3 months then go for it.
Use digital apps to help you save money. Digital saving apps are what we are using to help us grow our saving accounts.
How to get started?
There are so many ways to start your emergency fund. The amount you save is your personal decision. Never compare your financial situation with others, ever!
My suggestion is not to have your funds in the same checking account you use to pay bills. An emergency account should not be easily accessible. Find a saving way that will prevent you from spending the money you set aside for emergencies.
Check out these posts:
- 4 Ways To Save Money When You Are Living Paycheck To Paycheck
- 40 Ways to Save Money That Works!
- Are you following these 5 personal financial rules?
When I started my emergency fund I barely made enough. I would automatically transfer $25 a week from my checking into my saving accounts.
Remember to pay attention to your banking institution as many will require a minimum balance of at least $100, if not, they will charge you a fee. As the weeks passed by I didn't miss it and my fund grew.
Again, the way you start your own emergency fund is up to you. Saving the loose change, saving all your $1 bills, 52 Week Saving Plan, how you save is up to you. Just remember that what something is better than nothing.
Having an emergency fund is important and should be considered a top priority. An emergency fund will keep you away from getting into more debt and paying more money.
Starting an emergency fund is as simple as putting away a few extra bucks away. Whatever the amount you decide to set aside remember that an emergency fund is a difference between financial failure and financial success.
As time passes you will realize that the debt cycle you seemed to be stuck is broken because of your emergency fund.