The pandemic has shone a light on many of the inadequacies of the modern world, one of them being disaster preparedness. Even on an individual level, many of us simply weren't ready to handle the major disruptions in everyday life that came as a result of the virus. While it's not pleasant to think about, it's also not unlikely that something like COVID-19 could happen again. If that does come to pass, you need to be prepared. To that end, let's look at four tips for filling an emergency fund in a crisis.
Reduce Spending on Non-Essentials
This is a fairly basic tip, but reducing spending on the non-essentials is a good way to build up a fund of any kind. Cut a couple of corners on the grocery bill or cook at home instead of ordering out. Then, you'll find yourself with at least a little extra cash. Even if it's just a few dollars a month, those few dollars can quickly turn into a few hundred dollars by the end of the year. Tuck that money away for a rainy day or another emergency instead of wasting it on things you don't need.
Set Goals for an Emergency Fund
While saving with whatever you have leftover is a fine idea, having actual savings goals is even better. Set benchmarks for your emergency fund so you'll be more motivated to put some money away each month. Start with something reasonable like $100 or so each month. Then, increase it as you get a better feel for your finances. This has the added benefit of helping you sort out your overall spending budget while you're at it, which is something plenty of people could stand to do even when they aren't looking for ways to save.
Things are a lot easier to do when you feel like you're getting something out of it in the short term. While an emergency fund pays off in the long term, the short-term result is limited spending. Offsetting this feeling with the occasional reward for good progress is going to be key to keeping up with your savings. It doesn't have to be something extravagant that costs a lot of money; just something nice that makes you feel good about how you're staying on track with your goals. Cooking something nice for dinner, buying something simple you've really wanted, or anything else in this line would be ideal.
While the image most people have of an emergency fund involves some loose dollar bills under a mattress, there are far smarter ways to save for disaster. For starters, try saving your money in a savings account. It's a simple solution but some are reticent to trust, in part, because of the hassle of opening a new bank account. The benefits outweigh the annoyances, however, especially when making money through the interest. If you keep the account dedicated to what it was made for, that's essentially free money for the future.
Create an Emergency Fund for a Crisis
No one likes to think about disaster, but ignoring the possibility of things going wrong will just leave you unprepared. Whether it's the COVID-19 pandemic, a natural disaster, or anything else that might ruin your day, building an emergency fund is crucial to protecting your future. Try these four tips to stay on track and fill that fund before it's too late.