You may have heard that factors beyond a person’s control like job loss or unexpected medical bills are often the cause of bankruptcy. While many Americans survive paycheck to paycheck, you should do anything you can to prepare for a rainy day.
A financial hardship doesn’t have to be something as catastrophic as losing your job or a hospital stay; a surprise car repair bill or having your hours reduced at work could affect your livelihood. Having an emergency fund in situations like these immensely helpful because it means you can manage your bills better without using credit or making installment payments.
Saving money may seem difficult, but any money that you can save can make a sudden personal finance crisis more bearable. These are a few ideas for starting your rainy-day fund:
- Find a second job. If you’re able to, why not find a second job doing something you enjoy for a few hours a week? Having a secondary source of income that requires a small time investment can making setting money aside a breeze.
- Set a budget. How much money are you taking in versus what you’re spending? What are your monthly expenses? If you can’t comfortably answer both questions, creating a personal budget is a good idea. This way, you can identify how much money you need at minimum to cover your basic expenses, like bills and groceries, and how much you have leftover for fun and saving.
- Create a change jar. While this may sound like a cheesy idea, over 50 percent of people who tried this method for saving money were successful. What’s particularly satisfying about this method is that you can see the money you’re saving. You can decide whether to deposit this money every week, month or whenever the jar is full.
Something is better than nothing when it comes to saving money
No matter what you do to save money, it’s important that you do something. Even saving $50 a month puts you at an advantage over someone who saves nothing at all. Having any extra cash on-hand can make a difference if you find yourself with a surprise bill. Of course, the best plan for saving money is the plan that you will stick with and enjoy.