1. Set a Clear Savings Goal.
Determine a specific amount that you can have saved in your emergency fund by a certain date. Financial experts often recommend having 3-6 months’ worth of living expenses saved for emergencies. This will depend on your current household income and the number of people in your household.
Review your current budget and consider what amount of funds would make you feel secure in the event you find yourself needing to pay for expensive vehicle repairs, surprise medical bills, or other unexpected expenses.
2. Evaluate Your Current Budget and Expenses.
Is there a subscription you’re still paying for but rarely or never using? Those dollars could go towards your emergency savings. Think about some costs you could cut to put towards your emergency fund. List out the priorities in your budget and review recurring expenses that you could reduce or eliminate to make room for contributions towards an emergency fund. Reallocating funds is a simple way to let your money work for you and add consistently to an account that will help ease your mind if you end up in a challenging situation where you are hit with surprise bills.
3. Develop a Schedule for Growing Your Savings.
Create a specific calendar to indicate when you will contribute to your emergency fund and set up reminders or automatic contributions to stay on track.
Whether it’s $500 once a month or $20 once a week, a little goes a long way to build your emergency funds.
Once you determine an appropriate amount to contribute on a fixed schedule, you can choose a cadence at which you will transfer or deposit funds to your emergency savings. This strategy will be resourceful for achieving your savings goal in the timeframe you expect to have your fund built in. It will be beneficial to set reminders for making deposits or arrange recurring automatic transfers to your emergency account to simplify your schedule.
4. Choose the Right Account for Your Emergency Savings.
Determine the account that best suits your needs and emergency savings goals. Consider meeting with a banker to discuss your account options and opportunities to earn interest on your savings.
When you are deciding which account to use for emergency savings, think about the dollar amount you are hoping to have saved and the timeframe you plan to build your fund within. This will help you evaluate your account options based on their features and interest rates and select an account that will help you achieve your goals for your emergency fund.
5. Allow Your Fund to Serve Its Purpose.
It’s best practice to leave your emergency savings set aside for the event that they are needed for relevant scenarios, such as major home or vehicle damage repairs. Make sure your account remains easily accessible so you can withdraw funds and access the money quickly for unexpected circumstances. However, don’t let your account tempt you to use the funds for non-essential or non-emergency purchases.
Set boundaries and remind yourself that it’s best to reserve your savings for emergencies only, so you don’t have reduced funds in the event you need to pay for unexpected expenses.
When it comes to saving for a rainy day, a little goes a long way. Regular, small contributions to an emergency fund could offer peace of mind when life throws you a curveball!
Consider speaking with a banker or financial advisor for guidance on developing an emergency savings plan tailored to your current budget and financial goals.
Call (314) 212-1500 or visit a Royal Banks location near you to learn about our savings, certificate of deposit, and money market account options. A banker can help identify the right savings account for your current needs.
