At some point, everyone has a need for an emergency fund. We all know how important it is, and we especially know it when we run into unexpected expenses. But only 41% of Americans have the savings to cover a $1,000 sudden expense.
If you're finding yourself among the other 59%, you can start to turn around your savings account today. Here’s how you can add a quick $500 to your emergency fund.
Do a Full-Blown Spending Breakdown
It’s easy to spend here and there without thinking about it. For example, buying coffee and a snack, or you order takeout instead of cooking at home. Those bits and pieces add up fast.
To make sure you're getting the most out of your money, do a complete budget audit. Use Thinkflow to categorize your expenses over the course of a few months. This will show you where your money is really going.
Chances are you'll see some expenses that you can easily cut back. Make rules for yourself about those key expenses. And you can use Thinkflow to forecast your cashflow to know exactly how much is safe to spend, and when to tighten your spending.
Treat Savings Like a Bill
The biggest mistake people make with regard to savings is saying, "I'll save whatever’s leftover." Spoiler alert: you'll just keep spending until there's nothing left.
Instead, add "savings" to your list of bills to pay. When you're paying your rent, insurance, and other bills, pay a certain amount into your savings account too. By looking at your savings as an obligation, you'll set your savings budget and make progress.
Get a Side Gig
The reality is that your day job only brings in a finite amount of money. For some of us, that amount isn't enough to cover necessities plus the money to build an emergency fund. Try picking up a side hustle and putting the extra money you earn into your emergency fund.
It doesn't have to be a true part-time job that requires you to work a certain amount of time. You could try options like driving a rideshare vehicle, doing odd jobs on TaskRabbit, or dog-walking. A few hours every week can add up to your $500 goal in a hurry.
Take a Look at Your Subscriptions
There's a reason why so many businesses use a subscription model today. Customers tend to sign up for subscriptions and keep them on their credit cards, even if they rarely use the services.
It's time to stop the mindless spending. Go through your accounts and make a list of all recurring subscriptions. We're talking streaming services, gym memberships, monthly subscription boxes – all of it.
Go through each item on that list and think about how much it costs you over the course of a year. Is it worth the cost? How often do you actually use the service?
If any of them don't add real value to your daily life, cut them loose.
Shop Around for Recurring Expenses
You can go a long way towards your emergency fund by lowering your spending on incidentals. We tend to think our necessary monthly bills are a set amount and there's nothing we can do about it. That's not always the case.
In the same way you'd shop around for a better deal on a new couch, shop around for your monthly bills. Is your insurance carrier really giving you the best deal? Are you paying more than you should for your internet?
These are all questions you can answer by researching your options.
Take a Tip from Marie Kondo
The world loves Marie Kondo and her clutter-cutting strategies. As it turns out, cleaning out your junk doesn't just give you more space and less chaos. It can put cash in your emergency fund, too.
Tackle one or two rooms every weekend and go through every item. Do you use it or need it? If not, put it aside.
Now you can get to work selling everything in that pile that's in good condition. Take all the money you make and put it straight into your emergency fund.
Take Advantage of Online Banking Tricks
Your bank knows how hard it can be to build up a savings cushion. That's why many banks offer tricks and tools that can help.
Some will round up all your transactions and put the "rounded" amount into your savings account. You can save several dollars every day without a second thought. Other banks use different methods but it's all the same idea: saving without effort.
Remember those techniques are all about small deposits. It would take a long time to reach your $500 goal with the rounding-up method alone. Use these options to add to your other savings efforts, not to replace them.
Find Alternatives for Retail Therapy
For many of us, shopping is a fun hobby. It's not about the items we buy as much as it is the act of shopping and buying. Unfortunately, that's not a healthy habit for your wallet.
If you're a recreational shopper, start making a list of the other things you can do for fun when you feel the urge to shop. This way, you have alternative options in front of you.
Build Your Emergency Fund
We can all think of fun things to do with $500. At the same time, we also know how awful and stressful it feels to have an unexpected expense you can't pay. Building a cushion in your emergency fund can make a world of difference in your daily stress and financial health.
Use the tips above to start building your emergency fund, eventually hitting the optimal goal of saving six months of living expenses. To get started by analyzing your expenses, register for Thinkflow today.