This is just but the reality of life
and financial crisis can hit at any one time, when you least expect it.
Sometimes, life happens and having to pay for an unexpected car repair, a
medical bill or losing a job means you can still survive without worrying.
Hopefully, you have a half year to one and a half years of your living costs
saved. In fact, these small changes deliver the exact tools needed for readers
just beginning an emergency fund, or for those who want to quickly accumulate
the money to start one.
1.
Set a Clear Goal
So it’s important to understand how
much of an emergency fund you need before you get started on creating one.
Starting with estimating the amount you must spend each month for housing,
power, food, transport, and insurance. That is, multiply that by a duration of
three to six months depend on the amount of extra time you want. This amount
will become your goal which you should save in order to achieve a healthy
amount in your savings account.
For instance, if your basic living
expenses amount to GH¢2,000 a month you should ideally save between GH¢6,000 – GH¢12,000
for the emergency cash fund.
2.
Open a Separate Savings Account
Holding the money in an emergency
fund account different from the checking or savings account ensures one does
not spend it. Find an account with interest rate, which enables the fund to
earn more, or opt for a high yield saving account. Almost every internet-based
bank has an even better rate than physical money institutions; therefore, you
should consider putting your emergency money there.
3.
Automate Your Savings
Another quick way to create an
emergency fund is to set up the fund to automatically deduct money from your
paycheck. To ensure that you save money in the emergency fund on regular basis,
create an ATM transfer from your checking account every pay day. The adage, ‘a
dollar today is worth a dollar tomorrow’ might not entirely hold water here, as
even tiny amounts brought in continually can grow by the time one hits the
hundreds, thousands, millions, and so on. For instance if you are disciplined
to save GH¢100 every time you receive your paycheck, that is GH¢2400 in a year
if you receive pay checks every two weeks. The benefit of automating the
process is that you get to save frequently without having to remind your
selves.
4.
Cut Non-Essential Expenses
By eliminating unnecessary expenses
then; you can save towards the emergency fund more aggressively if your goal is
serious. Check your financial statement and think over the expenses that you
can decrease for several month, for example, food in restaurants, entertainment
and subscriptions. This money should be redirected to building your emergency
fund to help you fasten your progress.
For instance, canceling a GH¢50
monthly streaming service and GH¢100 that spends on restaurants every month
will give you GH¢150 per month or GH¢1,800 per year.
5.
Sell Unused Items
Selling things you no longer need is
on of the most effective ways of increasing emergency fund as soon as possible.
Around your home, there must be old Electronics, clothes, furniture or
collectibles which are still in good condition but not in use or use
frequently. Sell these items on Facebook Marketplace, eBay or any local buy and
sell page to get some money.
They can easily add a couple of
hundred bucks and give your emergency fund the injection that it needed.
6.
Take on a Side Hustle
If you want to really boost your
savings remember that’s always a good idea to have a side job and earn more
money. Freelancing, taxi/Uber or Lyft services, delivering food for companies
like Uber Eats or Grub Hub, or offering your services through digital platforms
for odd jobs are ways people earn part time income. Just a few hours a week is
enough to boost your emergency fund greatly.
For instance, if you make GH¢300 per
month in additional income from a side job, you’ll have GH¢3,600 in your
account at the end of the year.
7.
Cut Back on Debt Payments
If you are the type of person who is
paying off the bottom line on credit cards and other forms of debt, saving that
much amount might be more useful to you: instead, save less but pay the minimum
on your card and use that reserved amount on building an emergency fund. You
can go on paying the minimum amounts to avoid interest hike but any extra
amount usually used to pay debts can go to creating an emergency fund till you
set aside enough money.
After you a full emergency fund
established, you can come back to the strategy of paying down your debt.
8.
Use Windfalls Wisely
All extra funds received either from
tax refunds, bonuses, or gift money are instrumental in getting to that savings
amount quicker. Rather than use such windfalls, invest them in your emergency
fund immediately every time they are received. Such quantities of money can
have a major impact in the brief space of a few years.
For instance, a GH¢2000 tax refund
goes a long way in contributing towards a GH¢6000 emergency fund within one
shot.
9.
Track Your Progress
You need to focus and build the fund
for an emergency and the process help you goes smoothly as you can track your
improvement. Synchronize savings account visits and have mini targets like 25%,
50%, or 75% to the total savings amount. The ability to watch your fund
increase will provide the motivation to stay on course.
10.
Stay Disciplined
Lastly, discipline is key. Do not
spend money that you have saved for an emergency on other irrelevant needs
which might be attracting you. This money should be spent only when there is
really an emergency such as loss of job, a medical crisis or some home repair
crisis. Make it a habit of constantly questioning its existence or its
management so that it stays whole and untouched when you really need it.
Conclusion
It is totally achievable to build an
emergency fund fast if proper urgency and discipline, and some correct
financial choices are made. The goal to attain is therefore simple, you set a
goal of saving, automate your savings, cut on all non-essential expenses and
look for any other source of income to fund your emergency fund as fast as
possible. Starting today, start saving and ensure that you get the kind of
financial security that you have always wanted.
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