Every family should have at least a small fund kept aside for meeting emergency expenses. In US, one in three families maintain emergency funds, according to 2015 Pew Charitable Trusts reports.
According to the survey report of Pew Trust, an unexpected expense of lower income people usually varied $1000 or less when compared with higher income group unexpected expenses, which are recorded by $3000. Building an ideal cushion between income and expenses here are a few guides for you.
Regardless of your income, all households should make a proper saving plan. It is advisable to communicate with your case manager what percentage you need to save each month.
For example, if you save $84 per month, then at the end of the year $1000 will be accumulated in your account.
Make Budget Adjustments
Figure out your expenses-where my money is going?
Prepare a list of your household expenses and consider the need to reduce them.
Car insurance: According to Nerd Wallet 2015 study, drivers can easily save $859 per year when shop around at renewal time. So, compare insurance rates before you finalize your deal.
Utility bills: Depending on your current income, you may qualify for low-income assistance program which saves gas, water or electricity bill by a certain percentage.
Phone Calls: A cheaper cell phone will save your landline fixed and variable cost.
Transportation Expenses: A good amount can be saved by using public transportation as compared to private where you need to pay for high gas and fuel rates.
Think Creatively To Save Extra Money
Your bank might work for you: Ask your bank what percentage of the monthly fee will be waived if you set up an automatic fund transfer to savings. You can also get bonus points ranging from $50 to $ 300 if you switch your account to a low-fee checking account.
Savings from tax credit (rebates)
What is a tax credit? An amount which is deductible from the total tax you owed to the government. Talk to your tax professional to know about refunds and rebates because both of these can help you to build a good emergency fund.
Use of coupons
When visiting supermarkets sign up for loyalty programs to get a shopping reward and use coupons when needed. This helps you to save money for your emergency fund.
Start with a small amount
Who ask you to save big if you’ve a low monthly salary? Start with small! Even if you save $1 each day, you’ll be able to accumulate $365 in a year. After your first $1000 savings, you will become habitual to save a little amount and even reach the target of $2000 per year.