Building an emergency fund from scratch is a daunting goal — whoever you are and whenever you start your first savings goal.
Whether you’re a freshman in college heading out on your own for the first time or a 50-something-year-old parent of adult children — saving for a rainy day doesn’t always come naturally. There’s a lot to learn about saving your money effectively.
If you don’t have time to learn those lessons the hard way, you’re in luck. This guide is a speed-round of savings know-how. These tips will help you save like a pro, no matter where you are on your journey towards security.
How You Can Secure Your Finances Before You Hit Your Savings Goal
By virtue of being a savings beginner, you won’t have a lot of savings set aside. That will change soon, but until then, you won’t have any funds to help in case of an emergency.
If need to pay a deductible following a surprise visit to the ER, you might find some security knowing there are loans online to help. Check out online direct deposit loans if your unexpected medical expense has a tight deadline.
These loans, if approved, arrive automatically in your account quickly and conveniently. While the exact timing depends on your bank’s policies, this direct deposit cuts down on a lot of the busy work that usually stands in the way of a loan.
While borrowing may clash with your ultimate goal to save, personal loans give you the freedom to cover urgent issues before you manage to build an appropriate emergency fund.
3 Savings Tips to Curb Emergency Fund Anxieties
Follow these tips when first starting out — they’ll help you manage your anxieties around being prepared.
1. Set a Smaller Goal
Six months of living expenses represents an enormous amount of money that doesn’t come easily. That goal alone is enough to scare many people off saving.
If you believe you can never save that much money, why even start?
If the end-goal inspires fear, adjust it. No one says you have to save that much money at first. What’s important is that you start saving. Try for your first $1,000 instead and move on from there.
2. Automate Your Deposits
Hitting any goal can be challenging if you forget to transfer money into your account. Automating your savings can help you avoid this simple mistake.
To ensure you can afford this withdrawal from your checking account, sit down with your budget. Common budget guides suggest saving roughly 20% of your take-home pay each month, so you might have to change the way you spend.
Don’t worry if you can only make 10% at first. Anything is better than nothing.
3. Choose the Right Account
If you leave savings in your checking account, you run the risk of spending this cash on things that aren’t savings. You also lose out on financial advantages that come with a deliberate savings account.
You can find a decent interest rate on high-yield savings accounts these days thanks to the Federal Reserve. In an effort to squash inflation, the central bank has increased rates on both personal loans and savings.
Higher interest helps your emergency fund grow faster, so shop around to find the best rates. Just don’t lock your savings in for a term because your emergency fund needs to be available at any time.
Do you feel better about the task ahead of you now? Take advantage of these tips and follow them for emergency fund success.