You can do all the right things—make and stick to a budget, watch your spending, put money into savings—and unexpected expenses will still crop up. But with a little planning, you’ll be better prepared for whatever life throws at you.
Create an emergency fund
An emergency fund is something you can rely on when the going gets tough. There’s no set amount to strive for, but most people try to have three months’ worth of expenses socked away for a rainy day. Make a goal and try to save money each month. Better yet, use online banking to set up automatic deductions from checking into savings.
Take a closer look at your spending
Make a list of all of your monthly expenses: rent/mortgage payment, gasoline, internet, cell phone and so on. What can you afford to cut back on—or cut completely? Is there a certain streaming service you only use once in a blue moon? Can you rent audiobooks from the library rather than purchasing them with a paid subscription? It doesn’t have to be forever, but little cuts here and there can make a difference in the long run and help you save.
Take on a side hustle
We’re not saying you need to juggle two full-time jobs, but a side hustle can help you bring in a little extra income. Maybe you love making jewelry—can you sell your creations on Etsy? Are there any freelance gigs you can take on? How about pet sitting or dog walking? Put any extra money you earn into your emergency fund so it’s there when you need it.
Negotiate with credit card companies
If you carry a credit card balance, you already know that interest rates can be a beast. Contact your credit card company to ask about lowering your interest rate or monthly payments and erasing late fees. It won’t eliminate your debt, but it’ll make things easier to manage until you’re back on your feet.
Look into short-term loans
Short-term personal loans can help cover your expenses and tide you over in the short term. They are not meant to be a long-term solution and should be paid off as soon as possible. Review the loan terms carefully and double-check the fees and interest rates—some of which may be significant.
Ask your employer about a paycheck advance
Some employers offer paycheck advances for work you’ll do in the future. Contact your human resources department to find out if it’s something your company offers.
Shop for insurance
Insurance is a great safeguard in an emergency. Take some time to review your policies and shop around. Could you pay less for the same—or better—coverage with another company? Do you really need that extra life insurance policy? Shopping around is a great way to reduce your spending.
The bottom line
No matter how you choose to prepare for unexpected expenses, it’s important to take whatever money you save and funnel it into your emergency fund. Every little bit counts, and you’ll be surprised how quickly it adds up. And if or when the day comes that you need to dip into your savings, you’ll be glad you began saving when you did.
Schedule an appointment today to meet with a banker and discuss the best options for your emergency fund. At WaterStone Bank, we’re here just for you!
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