What would happen if your car, which is your transportation to and from work every day, needed a necessary $1,000 dollar repair tomorrow. Could you cover it with your savings? Or would you charge it? Would you borrow money? Or would you put your rent money towards it?
According to a National Foundation for Credit Counseling study, only 36 percent of respondents could turn to their savings, while an alarming 64 percent of those polled would turn to outlets other than their savings to cover an unexpected $1,000 bill.
Of that 64 percent, 17 percent said they would borrow money from a friend or relative, and an additional 17 percent would ignore other monthly expenses to come up with the funds. Meanwhile twelve percent of those respondents decided they would sell or pawn their belongings. Just 9 percent would take out a loan, while another 9 percent would put a cash advance on their credit cards.
So what’s the big idea here? How come less than 50 percent of those polled don’t have sufficient savings? And why are so many willing to take a credit score hit when they ignore their credit card payments while others are so eager to pay high interest rates on a personal loan? Doesn’t saving money seem to be the easier and less invasive method of paying off a surprise bill?
The answer is yes, saving money is the best way to cover an unforeseen financial hit, so that you can afford these little life emergencies without selling all your assets or bothering friends for cash. While saving can be tricky if you’re living paycheck to paycheck, there are certainly ways of finding cash to put toward your savings. Here are 3 simple ways to save for an emergency.
1. Create a Budget
If you’re avoiding a budget, chances are you already know you’re making frivolous purchases, which may be taking away from potential saving funds. Stop ignoring it, and sit down down and draft up a budget so that you have a better idea of your incoming and outgoing money.
Just because you’re tracking your expenses doesn’t mean you have to pinch every penny you make either. You can still make room in your budget for “fun money,” as long you’re putting money into your savings too.
Taking charge of your finances should be empowering! And no more excuses, there are countless free smartphone budgeting apps that will do the dirty work for you if you don’t want to do the math on your own.
2. Cut Back
Now that you have a better understanding of your monthly expenses, you can see where you can trim your expenses. Do you really need to make that Starbucks run every single morning? Why don’t you make a cup of Joe at work instead? Or is it necessary that you buy a brand new outfit for your Friday night date?
Don’t cut out all the things that give you joy, but think twice before making a lavish non essential purchase, as the price of those new shoes could be a chunk of money toward your savings.
Or instead of cutting out your daily cup of joe, lower your monthly bills with BillCutterz. They can lower your monthly bills such as cell phone, cable and satellite TV, Internet, electricity and more. All you have to do is send them your monthly bills to start saving money.
3. Make Saving a Priority
Instead of putting your leftover money at the end of the month into your savings account, designate a portion of your paycheck and place it into your account as soon as you get paid. Whether it’s 5 percent, 10 percent, or 20 percent of your paycheck, you will slowly but surely begin to make a profit.
You don’t need to be told that a savings account can help you cover one of life’s emergencies, because emergencies are stressful enough without having to worry about paying for it. Do your future self a favor, and focus on saving today, so that you don’t have to stress tomorrow. .