I look at new year as a new opportunity to start a project – be it for work, personal growth, family plans or finance goals. If you feel that way and leaning towards starting one finance goal this year, I encourage you to start your Emergency Fund.
To help speed and consistently build your Emergency Fund, here are five saving habits to help make sure you get results and reach your financial goal:
Save First, Spend Later
Spending is money going out. The more you spend the lesser money you have left to set aside for savings. Before rewarding yourself my buying your “luho” or any item that falls in your want list, make sure to separate the money intended for home expenses and for your savings. This is where saving for Emergency Fun comes in. You can allot a few hundred to thousand pesos to your emergency fund. Do this as soon as your salary comes in so ou will not be tempted to splurge on other expenses.
Take Baby Steps
Building an emergency fund can be overwhelming. Especially if you realize the amount of money you need to save up for. It is okay to take things slow and at a pace that you are comfortable in. Try saving the least amount that you are comfortable of setting monthly for. One of the important thing to develop is to the habit of setting aside money and be comfortable at not spending all the money you have in your bank accounts.
Automate your Accounts
An easier way and a great hack to go at raising your emergency fund is to automate it. Most banks, if not all, already have an automated fund transfer service to another account. This account could be a regular account or an electronic one. You can schedule the transfer to happen a day after your salary comes in.
Use It Only for Emergencies
To safeguard your emergency fund from unnecessary spending, make sure to use it only for emergencies. This could be used if you lost your source of income or planned to transfer to another company, calamity or pandemic expenses, etc. Think of it a a buffer fund for the unforeseen situations, that way you won’t dip into your other savings accounts.
Increase Your Income
Another way to help build it is to increase your income. Increasing your income will give you excess funds to be able to set aside to savings like your emergency fund. Make sure to prioritise your emergency fund first before any other savings that are not time bounded.