NDSU Extension - Morton County

Accessibility


| Share

March 2, 2020 Building an Emergency Fund

Vanessa Hoines, NDSU Extension, Family and Community Wellness

Dates to Remember:

            March 10:  Fit & Strong begins, Mandan

            March 11: Staying Safe in the Sun: Insight From a Skin Cancer Survivor - webinar

            March 18: Growing a Butterfly Garden - webinar

            March 19: Morton County Ag Day, Bismarck

            March 25: Growing Grapes in North Dakota: Common Diseases and Varieties - webinar

 

Building an Emergency Fund

We’ve all heard of the best practice of having three to six months of expenses saved for an emergency fund. While that is a great goal for some people, that can be an overwhelming place to start for others. Instead, America Saves encourages our savers to start with an emergency fund of $500.

A speeding ticket can set you back a couple hundred dollars. Have you ever shattered your cell phone? That can put you back a couple hundred dollars. The same goes for many other unexpected expenses that occur all the time. A hundred dollars here, three hundred dollars on some new tires there. We’ve all been there. Having access to just $500 will help cushion your bank account when those expenses hit.

Regardless of your current financial situation, below are some tips and tricks to get you closer to establishing an emergency fund so that you can feel financially confident when those real-life unexpected expenses occur.

Six Simple Steps to Jump-start Your Emergency Fund

Saving several months’ worth of living expenses for an emergency fund can be intimidating, especially when it feels like all of your available cash is already accounted for each month. Better Money Habits offers these six simple steps to help you get started building a reserve of cash — bringing with it greater financial security and peace of mind.

1.         Take it day by day

Putting aside months’ worth of living expenses might seem like an impossibly tall task. But more important than hitting your savings goal right away is simply getting started. To do that, pick a realistic number you think you could work toward in the short term. Some people, for example, might start with a goal of $50 or $100 a month or as little as $2 to $3 a day.

2.         Pick something and cut it

You could carpool to save on gas, bring your lunch to work or go without that fancy coffee.  You may want to identify one discrete thing you can cut, which can be easier than trying to change your behavior.

 3.         Make it easy on yourself

An easy way to save more consistently is to set up automatic transfers from your checking to your savings account. If you have direct deposit at work, you might be able to set aside a percentage of your paycheck to go directly to your emergency savings account each pay period.

4.         Don't let debt get in the way

If you’re struggling to pay down debt, saving might be the last thing on your mind. And if your debt carries high-interest rates—like credit cards—it might make sense to aggressively pay down balances first. But if your rates and balances are lower and more manageable, you can work on both goals at the same time: Consider allotting funds to both debt and savings each month.

5.         Keep your funds accessible—but away from temptation

Emergency funds must be available when you need them. That means not locking them up in accounts that charge you to access your money—or keeping them in an account you’ll be tempted to tap for everyday expenses. Consider creating a separate, interest-bearing, FDIC-insured savings or money market account.

6.         Now, up the ante

Don’t stop once you’ve hit your initial savings target. Steadily increase your savings goals until you have put aside enough money to cover your expenses for three to six months—a significant buffer against unexpected emergencies.

Creative Commons License
Feel free to use and share this content, but please do so under the conditions of our Creative Commons license and our Rules for Use. Thanks.