No matter who you are and where you live, it’s important to have a plan in place to cover $1000 – $2000 worth of emergency expenses at any given time. You may be thinking that this doesn’t apply to you because you just can’t afford to have that much savings on hand or because you currently have to pay off debt, but it’s still wise to work at making it happen.
If you live paycheck to paycheck and don’t build up a fund for emergency expenses, you may find yourself stuck in a tight spot. For example, if you get ill and have to take time off from work, you won’t be able to pay your bills. And even if you rarely get sick, an emergency could happen. Maybe your car gets hit and the insurance won’t cover it, or maybe you’re unexpectedly laid off, and unemployment isn’t enough to cover your normal cost of living.
So, the first place to start is to consider saving money by regularly making deposits into a savings account. It doesn’t have to be an astronomical amount, but if you can set aside even $25 per week, you’ll build up funds before too long. Most people can afford that even if they’re on a tight budget; you just need to assess your “extras” and cut back a little bit, like maybe one less time of eating out per week.
If saving money and putting it into an account isn’t an option, there are other ways you can build up an emergency fund. You can consider borrowing money from others. It may be through a business lender such as a bank or from easy cash loans to apply for provided by private lenders. In that case, you can borrow the amount that you need and then pay it back at a fixed rate that you can afford.
There are two possible paths forward from this juncture. One is to borrow the money up front to build your stash and then budget the repayment amount without taking away from your savings. Or, you can wait until an emergency arises before borrowing money, and pay it back after that.
There are pros and cons to each of these. In the first approach, you incur a debt that needs to be repaid before the funds are even needed, but it’s a short-term debt, and once it is repaid, you’ll still have the emergency funds available to you. In addition, if an emergency hits, you won’t need to scramble to find the money to handle expenses.
With the second approach, you don’t incur the debt until the money is actually needed, but it can be a hassle if you’re short of cash and the process is delayed. If you find that borrowing funds isn’t working out, you’ll be facing a new dilemma.
Another option to consider is making quick cash via selling items through sites such as eBay and Facebook. You can sell items you have around the house or even items that you pick up cheaply and turn over at a higher rate. You can even sell an old car online if it comes down to it – an easy way to pick up a few grand if you don’t mind saying goodbye to the family truckster.
Part-time or temp work through agencies can also bring in extra cash until you’ve built up your savings. If you have a second vehicle after selling one, consider rideshare to earn extra income. Once you reach your goal, you can stop. If you can establish funds for emergencies, then when something unexpected hits, you can rest easy knowing you can afford to cover your expenses temporarily.