Debt Consolidation

3 Proven Strategies To Build Emergency Fund

Everyone knows that it is important to build emergency fund and maintain it, but very few successfully do it. The reason is that they follow wrong strategies. As a result, they often end up building this assumption that the process is quite painful. It is very important to understand that when you follow the right strategies, you can actually automate the entire process of saving for emergencies and eliminate all the pain that you may otherwise have to face. All you need is the right approach. Try these three proven strategies and you will see how effortlessly you can achieve your financial goals.

Automatic Deduction From Your Monthly Paychecks

Most banks allow you to set up an arrangement, as per which as soon as your monthly paycheck is deposited, a certain amount of money is automatically deducted from that and deposited into your savings account. When the process becomes automated, it will make things very easy for you. You will not have to do anything manually; thus, you can easily eliminate the pain from the process. You can make things much easier by setting up a similar arrangement for your regular monthly bills also. This way, you can easily pay off all your bills in a timely manner and still build emergency fund without even touching the money or doing anything manually. This is also a great strategy to avoid late fees on your bills, which is just another form of savings.

Keep Paying (This Time To Yourself) Even After All Your Debts Are Paid Off

While you are paying off your debts, you have to deal with tight finances, but you soon learn to live with that. Now that it has become your habit and you have found out your ways to live smoothly even while a certain amount of money is being eaten off by a big car loan or other loans, a great strategy is to continue making those payments (or a little less), this time to your savings account, even after you have got rid of your debts. The idea is not to spend this money on useless stuff. You can continue with the old tight budgeting plan and build emergency fund at a faster pace. The best thing about this strategy is that it will prevent you from getting into further debt problems.

Avoid Impulse Buying – Implement 30-Days Wait Period For Big Purchases And 24-Hour Wait Period For Small Purchases

Impulse buying is one of the most dangerous factors that can ruin all your budgeting plans. Therefore, you must do everything possible to avoid impulse buying. If it is a small purchase, wait for at least twenty-four hours. This waiting period is important, as you will get enough time to make an informed decision whether that purchase is necessary or can be postponed or cancelled. Likewise, if it is a big purchase that requires a big sum of money, you should wait at least 30 days. Purchasing a particular item may sound like a good idea at the moment, but you are likely not to feel the same way the next morning or the next month. When you implement this strategy thoroughly, you can save a fortune for yourself, which you otherwise could have just wasted.

Overall, when you follow the above three strategies thoroughly, you can easily build emergency fund without the risk of failure.

Custom Search

Tags: , ,
Posted in Budgeting, Debt Consolidation | 2 Comments »

2 Responses to “3 Proven Strategies To Build Emergency Fund”

  1. kate says:

    Very good and useful post. Very practical tips are given in this article for generating emergency fund. The first and foremost is create some recurring deposit account and make it deducted automatically from the account. I have done it and its very useful because you start living from that amount only. Don’t make debt overpower you which is a good strategy so start making payment there and then . Don’t linger on the situation because at the end it will increase the debt limit. Once you have made the habit of making timely payment we will learn the habit of living in a tight situation. And lastly avoid shopping malls as they will force a person to buy a product which is not required. So try to think while purchasing anything is it really worth it . Give some time for your decision of buying especially for big purchases if you really require that go for it otherwise drop the idea. By following these simple steps we definitely can save funds for emergency where we can avoid the situation of debt prone life. I have implemented most of the tips and found them very useful. Thanks for posting such type of article.

  2. michael says:

    It is really very thoughtful article and the tips are very easy and quite useful also. Emergency fund can save our self with the debt problems. Most of the Americans find themselves in a big trouble to pay off the heavy medical bills, so it is very necessary to have a good amount which can be used in any sort of emergency. The idea of automatic deduction is very nicely explained in the article, it seems quite easy also because the money will be deducted automatically from the account. If we plan to deposit a certain amount in a saving account, it is possible that we may default the deposition but by using automatic deduction we can reduce the risk of defaults. Impulse Buying is also a big problem, it is the main reason of spoiling a good budget and the solution given in the article is excellent. I really appreciate the thought of waiting period. If we follow this approach, we can easily get rid off this habit of impulse shopping. Saving always proves to be good for future and present also. If any one saves a little amount, I am sure he/she can build an emergency fund easily.

Leave a Reply

You must be logged in to post a comment.