Saving for Your Emergency Fund
Regardless of the situation, an emergency fund will help you keep your family afloat!
Times have been tough for most of us, especially in the face of the COVID-19 pandemic. In Kentucky, at the time of writing, the state now has a total of 7, 935 cases with a death toll of 346. The upside to that is the 2,785 people who have recovered from the virus. There’s no telling when this pandemic will end. There’s no telling when things will go back to normal.
However, the state is slowly letting businesses open up to resume their operations. In the issued guidance by Gov. Beshear, businesses will be reopened starting May 25 but with strict cautions on using electronic payments, keeping interactions to a minimum, maintaining social distancing, the wearing of masks, and more. Businesses to open are barbershops, salons, tattoo shops, nail salons, tanning salons, and other non-essential shops provided that they follow the guidance.
It’s great news for small businesses as they can keep their income. This experience may have taught all of us a valuable lesson – the importance of having an emergency fund.
What is an Emergency Fund?
Your emergency fund is a bank account with money that is set to cover large and unexpected expenses. This may include home repairs or appliances replacement, car fixes, medical expenses, unemployment, and apparently, pandemics. The emergency fund is your buffer that will keep your family financially safe in a time of need. This is all the more important if you have a debt to pay.
Starting your emergency fund
The first thing that you can do is evaluate your finances and cash flow. See how much is coming in and how much is going out, look for things that you can cut per month based on your budget that can go to your emergency fund. You also need to set a specific amount, and once that’s done, you can start opening an account. Look for an easy-to-access account with a decent return. If you are aiming for a higher return, you can go for a higher interest account to maximize the potential of your earnings.
Keep in mind that your emergency fund will remain untapped unless a dire situation calls for it. You can set it and just forget about it.
Building your emergency fund
There are ways to start your emergency fund right now. Here are some of the ways that you can do to build your emergency fund.
- Sell something
We all have some tendencies of hoarding some things even if we don’t use them any longer. If you take a little time and tour around your house, you may find things that you are no longer using. This may be an extra TV, old kid’s toys, exercise equipment, power tool, or something else.
- Look for one-time opportunities
Doing odd jobs is a great way to make some quick cash. You can do online surveys, care for pets for owners, walk dogs, or participate in consumer research. A look over your area’s Craigslist page will likely reveal some local opportunities to earn money.
- Cut down on your expenses
This is an obvious option and where you and your members of the family probably need to decide together. Take a look at your expenses per month and see where you can cut the most. Balance your priorities and make sure that they are aligned with your financial goals.
Another way that you can prepare your family for an emergency is by setting up insurance coverage to cover up unexpected bills such as medical bills, home repairs, and car repairs. These kinds of coverages may save you one day! Instead of using your buffer money to fund your home repairs and damages due to disastrous weather or other circumstances, you can use your home insurance instead. Ths same is true for your medical bills and car repairs.
Here in London Insurance Agency, we have agents that will provide you with the answer to your questions. Aside from that, they also have your best interests at all times. Reach out and call us now!