One of the best things a person can do for themselves and their family (if applicable) is to get their finances in order. Today it has never been more important to do so. With the economy still rocky and lay-offs the norm, individuals and families must work hard to get a handle on their finances. One such way is to establish an emergency savings fund. In fact, an emergency savings fund is a must-have.
An emergency savings fund includes enough money to cover a person’s living expenses for three to six months. It needs to include enough money to pay for a person’s rent or mortgage, vehicle, food and living expenses (utilities, gas for the car, etc.) for that amount of time. While this is pretty common knowledge, for people on a budget, it can be difficult to come up with extra money for savings. As a result, an emergence savings fund sounds a lot like a pipe dream. Below, we have listed a number of creative ways people can finance their emergency savings fund.
Ways to Finance a Emergency Savings Fund
Banking Loose Change
Many people would be surprised at the amount of money they could save if they banked their loose change. There are some banks that will help individuals do so. When a person makes a purchase, the bank will round it off to the next dollar and put the difference in a savings account. If an individual’s bank doesn’t offer this type of program, they can do it themselves. However, they’ll need to primarily use cash. Placing the loose change a person saves in a glass jar and then cashing it out when it gets full may sound a bit archaic, but is a great way to save money.
Consider Giving Plasma
In many cities, there are companies that will pay for plasma. The amount varies. Where I live, they pay between $20 and $38 per donation or between $160 and $300 a month. Individuals are allowed to make two donations per week.
Pay with Cash
Paying with cash is one of the best ways to save money. When a person shops with a debit card, especially one with overdraft protection, they are more apt to spend more money then they originally planned. By using cash, individuals only have so much money. Therefore, they must stick to their budget or risk embarrassment at the check-out counter.
If a family has young children or teenagers who have accumulated name brand or high quality clothing over the years that they no longer want, selling them to a consignment shop may be a good way to add to the emergency savings fund. This may not be something that is ongoing but it can be used as a one-time addition to the fund.
Without an emergency savings fund, a person and their family is at serious financial risk if anything goes awry, for instance, someone loses their job, is seriously injured or becomes ill and cannot work. Having enough money to take care of one’s expenses for a period of 3 to 6 months gives an individual and their family time to find a new job or secure additional sources of income. It’s always better to be safe than sorry. An emergency savings fund enables people to be the former and not the latter.