"Emergency savings" is money set aside to cover unexpected personal expenses. It's suggested that you have six months of essential living expenses saved in case of an emergency, however 28%* of Americans have no emergency savings at all. Even if saving 6 months of living expenses seems daunting, just saving a little will help a lot on unexpected emergencies like a broken down car or a trip to the emergency room. Here are some simple steps you can take to help build your emergency savings fund.
- Name your account.
A simple way to motivate yourself to save is to name your savings account based what's you're saving for. Naming the account something like "Emergency Savings" or "For Emergencies Only" will also make you think twice about removing money from the account.
- Automate your savings.
Setting up money to automatically transfer into your savings account will build your balance over time. Set up transfer on an amount you'll barely notice such as $10 a week or $40 a month. You won't miss the money in the short term and you'll be glad you set it aside in the long term.
- Cut unnecessary expenses.
Find something you can eliminate from your finances every month and then transfer those savings into your emergency fund. Never listen to Spotify? Transfer your subscription fee to your emergency savings account. Paying too much for your phone bill? Call your mobile provider and see if you can knock down your monthly rate and transfer those savings. It's money you won't miss.
- Put money into a higher yield savings account.
Higher yield accounts, such as a Money Market, require a higher minimum balance, which will make you think twice about withdrawing. Higher yield accounts usually have strict rules on when you can take money out, giving you more incentive to keep your money where it is.
- Save extra income.
Transfer or deposit any extra income such as a tax return or a work bonus directly into your emergency fund. This is essentially paying yourself in the future.
The hardest part of building any amount of savings is getting started. Once you get into the habit of saving, you'll see your money grow and appreciate when you need the money for an unexpected emergency.
Ready to get started? Rivermark has a variety of savings accounts to help you out. Open your account online and start working towards your savings goals.