How To Build Your Emergency Fund

You’ve already budgeted your expenses for each month, paid off your current debts, and bought a little treat with your extra cash. Then, suddenly, your boss tells you that you’re being let go. How do you survive?

Times like these are exactly what an emergency fund is for. Having extra cash saved away for sudden and unavoidable expenses is especially important in these times of economic uncertainty. But how do save up enough for an emergency fund? Where do you even start?

Read our simple tips below on how you can build your emergency fund:

1. Set aside a part of your income
As soon as you get your salary–whether it’s monthly, bi-weekly, or even weekly– already put aside a portion of it for your emergency fund. The amount can be as small or as big as your budget permits. Just make sure it’s enough that you can still afford your necessities like rent, food, and utilities.

2. Cut down expenses
If you want to fast-track your saving, consider sacrificing unnecessary expenses to add to your emergency fund. Maybe you can do without your cable or Netflix subscription for the next few months, and bring them back again when you have saved up a more comfortable amount.

3. Set a timeline
Building your emergency fund will not be an easy or quick task. It’s okay to take your time, as long as you stay consistent. A helpful tip is to set a goal amount and divide this by the amount you are able to give each payday. That will tell you how long you need to reach your goal.