Relaxing and taking your time to focus on what’s important to you are essential during the COVID-19 shut down. But reflecting on how to prepare for future emergencies should also be a priority. We at Uniamerica Insurance want to offer some tips that we’ve found on how to create an emergency fund.
The following is advice from the personal finance company http://www.nerdwallet.com.
- Calculate the total that you want to save. Add up your expenses in 6 months by checking your statements and the average you’d need.
- Set a monthly savings goal. This will get you into the habit of saving regularly and will make the task less daunting. One way to do this is by automatically transferring funds to your savings account each time you get paid.
- Keep the change. When you get $1 and $5 bills after breaking a $20, drop some in a jar at home. When the jar fills up, move it into your savings account. If you don’t carry cash, you could try a mobile savings app that makes automatic transfers, with rules that are based on the transactions you make.
- Move money into your savings account automatically. If your employer offers direct deposit, there’s a good chance they can help you break up your paycheck into multiple checking and savings accounts so that your monthly savings goal is taken care of without ever going to your checking account.
- Save your tax refund. You get a shot at this once a year at tax time — and only if you expect a refund. Saving it can be an easy way to boost your emergency stash. When you file your taxes, consider having your refund deposited directly into your emergency account. Alternatively, you can adjust your W-4 tax form so that you have less money withheld. Then direct the extra cash into your emergency fund.
- Assess and adjust contributions. Check in after a few months to see how much you’re saving, and adjust if you need to add more. This is especially important if you go through an expensive major life event such as marriage or a move to a new city, or have an emergency that causes you to dip into your existing fund.
For more ideas, read our recent article “How to Build an Emergency Fund.”
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