Maintaining an emergency savings account may be the most important difference between those who manage to stay afloat and those who sink in debt. An emergency savings fund consists of a small amount of money, usually in a savings or share account, that you do not have easy access to. Keeping $500 to $1,000 of savings for emergencies can allow you to easily meet unexpected financial challenges such as:
• repairing the brakes on your car;
• paying for a visit to the doctor when your child has the flu;
• covering the dental expense of filling a cavity;
• paying for a parking ticket; or
• flying to visit a sick parent.
5 Ways to Save $500 to $1,000 for Emergencies
1. Save Automatically. Have part of your paycheck automatically deposited into a savings or share account or set up regular transfers from your checking to your savings account.
2. Save your loose change. Putting aside fifty cents a day over the course of a year will allow you to save nearly 40% of a $500 emergency fund.
3. Make your monthly credit card payment on time. The $30-35 you save by not being charged a late fee each month on one card would save you most of the money you need for $500 in emergency savings.
4. Save a portion of your tax refund. Use tax form 8888 to split your return.
5. Bring lunch to work. If buying lunch at work costs $5, but making lunch at home costs only $2.50, then in a year, you could afford to create a $500 emergency fund and still have money left over.
Where to Keep Emergency Savings
It’s usually best to keep emergency savings in a savings or share account. These types of accounts allow you to access to your money when you need it. Keeping your money in a savings account makes it much less likely that you will use these savings to pay for everyday, non-emergency expenses.
Are you ready to set your goal?
America Saves, a non-profit that encourages individuals and families to save money and build personal wealth, can help you develop your goals and take action. When you join as a saver, you’ll receive the following benefits:
· Free subscription to the quarterly American Saver newsletter.
· Free monthly e-mail newsletters with savings advice from national experts.
· Free access to the members-only Savers Tracking Tool to help you reach your goals.