Of the many things to prepare in life, the most crucial aspect to prepare from are those unexpected moments. Hospitalization, dental work and car repair can cause considerable stress for someone who did not have any forsight of those things obviously happening. Therefore, it is crucial to have a solid emergency fund.
Reassess your budget
you may think that you have a pretty solid budget plan but how come you are still crying to your mom asking for money when your car breaks down? There must be something wrong with what you are doing. Even if you are living paycheck by paycheck, it is possible to save money. Imagine your surprise on how much you spend on little frills and thrills that do not really matter at all to you. Once you have laid down all the essential costs, look at how much is left. That will serve as your initial fund for the emergency fund.
Create a separate account
your savings account is where your money is being dropped? Settle your budget for the month and then take the emergency money to a separate fund. This is an ideal scenario. Nowadays, it has become easier to transfer funds sue to online banking so there is no reason for you to complain about setting up an account.
The $100 rule
it is essential to grow your fund monthly. $100 every month may seem too little but imagine how much this could grow in 12 months? If you raise it to 200 or 300, then you have a fund that will definitely keep you safe during the rainy days. By setting up an account that is always funded with money, there is no way that you can offer a bouncing check when you need to make an emergency car repair or payment for utilities.
Leave it alone
once you placed it on your emergency fund, it cannot be used. This is not free money anymore, you should have budgeted some for your own needs. Shoe, dress or video game emergencies are not real emergencies. Leave your account alone and let it grow. One you saved the money, forget it ever existed until a true emergency arrives.
