If you live on a tight budget it can be a struggle just to make ends meet each month. The idea of finding money in your budget to contribute regularly to a savings account may seem to be a complete impossibility. However, there are many reasons why you should make an effort to establish and fund an emergency savings account.
Many people who live on a fixed income have almost every dollar in their budget earmarked for credit card payments, a car loan payment, groceries, fuel for the car and more. However, you no doubt have lived through more than a few months when you have dealt with unexpected expenses. If you have a car accident, you may need to pay to have your car fixed. Your home’s heating system may need to be serviced, a pipe may burst and need to be repaired and more.
These may seem like they are unexpected expenses, but the fact is that these are all things that can and do happen all of the time. You may not need to earmark money in your budget to pay for them, but you do need to plan for them in some way. When you have an emergency savings account, you have the money necessary to pay for these expenses saved in your own account.
When you do not have an emergency savings account funded and have emergency expenses to pay for, you do have other options. You can pay for these expenses out of your budget, but this inevitably means that other expenses will not be paid for on time. If you pay your utility bill, cable bill, credit card bill and more late, you will be charged late fees that can be rather expensive. You can get money fast and avoid the expense associated with these other options when you do have an emergency savings account funded.
How to Fund Your Savings Account
If you do not already have a savings account funded, you may not have the financial means within your budget to save hundreds of dollars per month in a savings account. However, even saving a few dollars per paycheck can result in a large savings account balance over time. Consider reducing your spending where possible, such as by carpooling to work to save on gas, using coupons when grocery shopping or even eliminating your cable plan for greater savings. Then set up an auto-transfer function to automatically transfer money from your checking account into your savings account with each paycheck.
Over time, you will find that the balance of your savings account grows. It may take you months or even years to accumulate the amount of money that you would like to have in this account, but ultimately, you will find that this effort can help you to live more comfortably.
It can take some time to save up a sufficient amount of money in your savings account, and you may have to contend with unexpected expenses during this period of time. If you find yourself in trouble, we recommend applying at a money loan company.
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