Five Strategies for Forming Emergency Funds
Emergency funds have become more important than ever, especially as the global economy continues to sour. Yet, statistics show that most Americans spend beyond their means so much that they have literally zero dollars to their name. Of course, they do have their regular paychecks but they often get eaten up by bills and other expenses. So, when an emergency does happen many people find themselves amiss at what they need to do.
Centuries ago Benjamin Franklin said a penny saved is a penny earned. That principle still applies today, even though it’s rare you’ll ever find something worth one cent. Still, if you collect pennies over a period of several years, you’d be surprised at what you accumulate. You can earn more if you put quarters and dollars into that piggybank.
Either way, once your piggybank has gotten full you have two options for getting your money. You can either go to the bank and get them to give you cash or you can use a Coinstar machine. The latter is slightly more expensive but it tends to be a bit more enjoyable, especially if you have young kids around.
2. Money Market Account
If you want to establish an emergency fund, it’s imperative that you open a money market account over a regular savings account. Why? Well, money market accounts usually return your savings at a higher interest rate, (since they are regulated by the government). There is some risk associated with them, but your return is so high the risk is pretty much worth it. Besides, you can always put a portion of your earnings into a regular savings account if you feel uncomfortable with the money marketing concept.
3. Round Up Purchases
As we live in an era of technology, it’s easy to pull out our calculators and enter in exact figures when we buy things. This is not the best way. Instead, round up your purchases to the nearest dollar. Do this for everything you put in your cart.
For example, say you bought a grocery item for $2.50. You would round up to make the item $3.00. Just doing that you made a ‘profit’ of 50 cents. And if you keep doing this for all your groceries, you might have enough left over to pay incidental expenses like gas or lunch.
4.Pocket Your Tax Refund
And make sure you save your receipts so you have a refund to begin with. If you’re ever unsure you can get a professional to do your taxes. You’ll pay a little bit upfront but if you get thousands of dollars back, (as many people do), you’ll realize it’s worth it.
5. Have Fun without Spending
Entertainment is one of the elements that can make or break an emergency fund. This is especially the case during a poor economy, where people might turn expensive diversions to get away from it all. Well, I say don’t do that. Instead, go to museums, take walks or go to the playground with your kids. If you’re at home play homemade games, make crafts or even watch TV. If you’re creative there’s hundreds of things you can do that will allow you to have fun while spending any money upfront.
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