While you hope you’ll never need it, savvy savers know there will be a time when they need to fund unexpected bills.
Emergency funds provide a three- to six-month cushion for living expenses during hard-to-anticipate events, like job loss or divorce. A rainy-day fund, by contrast, is a few thousand dollars earmarked for unforeseen bills or home repairs.
We can’t predict the future, but with a few simple steps you can be prepared for financial emergencies and fund costly expenses with ease.
To simplify your savings goals, set up individual savings goals with SmartyPig. Car repairs are inevitable and can get expensive quickly. Unplanned medical bills such as emergency room visits and physical therapy can strain a budget. Unexpected home repairs like storm damage restoration or replacement of major appliances are important considerations as well. By assigning funds to each of these categories, you’ll be able to track the progress of your clearly defined goals.
Take the worry out of planning by developing an online savings strategy. Estimate costs of potential bills in each category, then allocate funds for each. By setting up a recurring deposit in your SmartyPig account, funds are automatically deposited into each goal on payday and you’re more likely to reach your goals. Even a plan conservative as ten dollars a week will add up to $520 before you know it!
Large deposits can significantly boost your progress. Consider moving part of your tax refund or annual bonus into your rainy-day fund to reach your goal even faster!
Strategic, every-day choices can save money that can be directed to your rainy-day fund. Leave credit cards at home and limit the amount of cash you carry to avoid impulse purchases. Create exciting new recipes at home rather than dining out and stick to your shopping list at the grocery store. You can even generate income by selling household items. If an item is rarely used, doesn’t bring you joy or simplify your life, it is a good candidate for sale.
It is important to ensure funds are separate from your day-to-day account. By utilizing an online savings account, your dedicated funds are safe from unintended use. When emergency bills occur, you’ll know exactly where you stand and how to fund the expense.
Create a rainy-day fund now for peace of mind and reduced stress when unanticipated expenses come your way.