The pandemic has led many people to realize the importance of having an emergency fund. As many suffered the effects of being unable to work due to lockdowns, the effect was felt as their paychecks evaporated. Consequently, many took on debt.
More than anything, the pandemic illustrated how those who didn’t have savings were left to apply for unemployment while they searched for other jobs, and many were unable to meet their regular financial needs.
While it can be difficult for the average worker to establish savings because of other financial commitments, those who do are in a better place should an emergency occur. To get you on better financial footing, Resolvly, a premier debt resolution company, offers the following tips:
Map Out Your Expenses
You can’t start saving if you don’t know where your money is going. Taking a clear inventory of your income and how you spend your cash can tell you where you need to make changes.
While there are some essential expenses, such as rent, food, insurance, medication, and transportation, there are others that aren’t so essential. These may include dining out, entertainment, or fancy clothing.
You can take advantage of many expense management and budgeting software tools. One of the most popular is Mint, a completely free application that allows you to show income, categorize your expenses, and set up savings goals.
Set Up a Budget
Once you’ve established how you are spending your money, you can make better decisions to manage it. You can identify how much money you are willing to spend on non-essential expenses each week and try to stick with your goal.
Don’t beat yourself up if you can’t meet your goal each week — occasionally, unexpected expenses will occur. You can’t plan for everything, but that’s the point of setting up an emergency fund — to ensure that you have savings for times of true need.
Establish How Much You Want to Save Each Week
Once you’ve established your budget, you can determine how much you want to put aside towards your emergency fund each week.
You can start small, with only a token amount, and build it up as you become more accustomed to the changes you’ve made to your spending habits. Common advice is to save $10 per week; try this amount at first, and increase it as you go.
Keep Your Emergency Fund in a Dedicated Account
You won’t accidentally spend it on regular expenses by setting up a bank account just for your emergency fund. You’ll also be able to monitor it. It can be very encouraging to see your savings grow over time, and chances are you’ll be more excited to save as you see the balance increase.
Working with Resolvly, LLC
Resolvly is a Florida Bar-approved lawyer referral service that helps clients nationwide connect with consumer protection attorneys who specialize in debt resolution. If you’re struggling with overcoming significant unsecured debt, such as credit card or medical debt, contact Resolvly LLC for help today.