How to Start an Emergency Fund

It’s not surprising that many people don’t have an emergency fund or substantial amount of money saved. It’s difficult to save money if you feel like all of your income goes directly to paying your living expenses! Believe it or not, the only way to get out of living paycheck to paycheck is to make it a priority to save money – especially for emergencies and unexpected expenses. How many times have you used a credit card or took out a loan to pay for an unexpected expense? If you had money saved, you could pay with cash and avoid getting into debt for these expenses. That’s the goal of an emergency fund.

Here are some tips for getting money into your emergency fund when you feel like there is none to save:

Loose Change

Start by looking around your home and car for any change lying around. Gather up the change and roll it. You will probably be surprised at how much loose change you have, and how quickly it adds up! Increase the amount of loose change you’ve got by returning your recyclable bottles and cans. You might even collect some from the side of the road to both increase the amount of money you get from recyclables and help the environment at the same time. There are many savings accounts that allow you to open an account with just a few dollars, so as soon as you’ve gathered a few dollars, use it to open your account. The first step to saving money is having a place to keep it! Look for an account that offers interest on the money you save, and no monthly or annual fees for using the account.

Round Up

Another trick that can help you save money even if you don’t have any to save is to round up in your checking account. So if you make a purchase that is $5.58, you would record $6 in your check register, and transfer the difference to your savings account. Most people who use this technique transfer the amount once a week – for all the change they saved by rounding up to the nearest dollar in the check register. You will probably also find your check register becomes easier to manage by using this method, too.

Automatic Deposit

Take advantage of your bank’s automatic transfer/deposit option. Open a savings account with the same bank and link it to your primary checking account. Once a week, have the account automatically transfer a small amount of money to the savings account. You can make it as small as $1 or $2 – just do it consistently. Even a dollar or two a week will add up over time and you are not going to miss such a small amount even if you are living paycheck to paycheck.