When it comes to savings, one thing is important for EVERYONE to do: create an emergency fund.
While it may seem unnecessary to put money away for something that may never happen, it’s wise to have a backup plan for those, “just in case” moments.
Most millennials don’t have a proper emergency fund.
If you have nothing in your emergency fund, you’re not alone. According to a 2017 GoBankingRates survey, about 67% of millennials have less than $1,000 in their savings account, and 46% of us have a balance of $0 sitting in a savings account.
Regardless of your lifestyle, having at least $1,000 saved is a goal you should set for yourself. You may think you don’t need one of these funds when you accidentally pop a tire, drop your phone in the sink, or discover a mouse infestation in your home. It’s these random life surprises that can put you in a tough place and build up credit card debt.
How to start saving:
The key to putting away $1,000 into an emergency fund is to do it as fast as you can.
The entire point of having this fund is to use it when something unexpected arises. Unfortunately, life doesn’t wait for us to have a solid emergency savings before throwing us flat tire. Doing this as quick as possible will also check off one financial goal from your list.
For some people this may look like 2-3 months, while for others it may be 11-12 months. Whatever your current financial situation looks like, everyone should have money in their account for life’s unexpected moments.
You might be thinking, “I don’t have extra money to throw towards a fund that may never be used!” No matter what your income is, anyone can save $1,000 with the right budget plan. Pick a reasonable amount that you can save each month. It’s important that this number is small enough to be reasonable, but large enough to get you there as fast as possible.
Let’s say you want to save $50 per month. That’s about $12.50 per week. To fit this into your budget, try cutting out $12.50 worth of expenses every week. Maybe the first week you cut out coffee. Taking this out of your budget for a couple months will help you make progress in your goal faster without cutting out $12.50 worth of necessities. After you cut coffee, try cutting alcohol, then Ubers, then random things from Amazon (you know who you are), and the list goes on.
Many think there’s no way they could save $1,000 on their income. But once you start quitting unnecessary purchases, you will start making way with your emergency fund. You will be amazed at how fast you can save up money when you make it a priority.
What about those who already cut out unnecessary spending and still struggle with saving money?
If you already live a frugal life without frivolous purchases, try cutting down your monthly bills. Things like water, electricity, and gas tend to sneak up on us and end up costing more than we expected. Try out these 5 ways to cut your monthly bills in half. This will allow you save save more, faster.
When all else fails, find out where most of your money is being spent. This is the key to saving more money on ANY income. When you find out where all of your money is going, you are able to alter it to fit your needs. Maybe all of your money is going to rent in your studio apartment in the city.
Start crunching numbers!
Would it be more cost effective to move out of the city and commute? Can you move to a cheaper neighborhood? Is your apartment holding you back or is it your daily lunch out? Find out what is ruining your budget, fix it, and use that money to put away towards your savings fund.
Anyone can save $1,000 dollars for their emergency fund. It is such an important financial goal that everyone should make a priority. For more budgeting tips, click here!