An emergency fund with meagre savings isn’t much of an emergency fund at all. If you can’t withdraw enough savings to pay off an urgent expense like a plumber’s fee or car mechanic’s bill right away, you need to make a change. You need to boost your emergency savings as soon as possible.
So, how can you boost those savings?
Budget for More Savings
Analyze your monthly budget to see which variable expenses can be trimmed in order to access more savings. Those additional savings can bulk up your emergency fund contributions from this point forward.
Do you not follow a monthly budget? You should rectify that issue immediately. Download one of the top personal budgeting apps on your smartphone and create your own budget right away. It will help you manage your monthly expenses, including your emergency fund contributions.
Automate Transfers
Your emergency fund won’t grow very quickly when you keep forgetting to contribute to it. Make sure that you don’t miss a single contribution by automating transfers from your checking account to your savings account. Schedule these automated transfers every single month.
The biggest benefit of automating transfers is that your emergency fund balance will continue to grow, even when you’re not thinking about it.
Add Windfalls
Any time that you gain a substantial sum of money, you should add a portion of it to your emergency fund. You can do this with holiday work bonuses, tax returns, inheritances, cash prizes and other types of windfalls. You will give your emergency fund a quick boost and take a big leap towards your ultimate savings goal.
Use Interest
What type of savings account are you keeping your emergency fund in? Is it a standard savings account? You might want to change that.
A standard savings account will come with a low-interest rate. This interest rate will not help you build your emergency fund balance very quickly. Your annual percentage yield will most likely be under 1%. To get more growth, you should move your savings into a high-yield savings account. The interest rate and the resulting APY will be much higher (ranging from 2-4%). This should help boost your balance a little faster.
Why You Should Increase Your Emergency Savings
If you don’t increase your emergency savings, your emergency fund won’t be a proper safety net. You can’t rely on it to pay for any urgent expense that comes your way. You won’t have enough.
When an urgent expense comes your way, you may have to borrow funds to manage it in a short amount of time. You could use your credit card, or you could try to apply for a personal loan that is accessible in your state of residence. So, if you live in Detroit, you could look into personal loans across Michigan as a solution. As long as you meet all of the eligibility requirements, you can fill out your application online. You just might get approved for the personal loan. In that case, you can use the borrowed funds to resolve your emergency and then follow a repayment plan afterward.
Borrowing funds is a backup plan that you can turn to when you have no savings available. Again, it’s a backup plan — it should never be the first safety net that you rely on in emergencies.
Your emergency fund shouldn’t be so empty. Follow these tips to boost your emergency savings and do it fast!
