If you don’t have an emergency fund, then you have to read this.
If you don’t have an emergency fund, then I need to stress the importance of having one. Life happens and before you know it you have an unexpected bill for your car or your home. This can leave you either piling it on to a credit card or happily knowing that your emergency fund will cover it.
Save in steps and look to save one months salary to start off. After you have got a month under your belt, keep adding to your fund and you will have a buffer to fall back on.
Here are five tips to get you saving;
1. Save 10%
Try to save 10% of your net pay in your emergency fund. It may seem a lot to start off with, but once you get into the habit of saving, then you won’t miss it.
2. Cut down your spending
If you’re struggling to find out how to save 10% of your net pay, then you will have to look at your outgoings. Try to cut down on things that you don’t need and be realistic with yourself. If you can’t save because you’re going out every week and frittering away money on needless things, then you’re going to cut back.
3. Start saving automatically
Some employers offer saving schemes that you can enroll on where they deduct the amount you want to keep before you are paid. Alternatively, you can set up a savings account with another banking provider that has instant access. Set up a standing order from your primary account to your new savings account, on or after the day you get paid.
4. Don’t touch it
For some people, this is the hardest part. It’s only for emergencies, not because you want to treat yourself. Don’t touch your emergency fund unless it’s an emergency!
5. Boost your savings by cutting down debt.
If you have a credit card or a loan, then see if you can refinance them to slash the rates so you will start saving money straight away. Find out how you can save by cutting your credit card rates.
You've worked hard, cut back and took the initiative to save up a comfortable amount. Reward yourself for your hard work.
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