Emergency funds, as the name implies, are meant to be used only in emergencies. Life is full of unpredictability. You may find yourself in a situation where your company may be laying off staff, or you may face a medical emergency. Whatever the case, whenever tough times come, you must be prepared.
However, building up emergency savings can be challenging. It typically takes time to build your emergency fund account. But if you’re disciplined, you’ll be able to raise money quickly. Here are some tips to consider for building an emergency fund fast.
- Use Payday Loans
If you’re looking for access to cash quickly, getting payday loans through lenders like WageMe might be worthwhile. Although this type of financing helps you acquire money quickly, it includes terms and conditions that you should be aware of before taking out the loan.
When you apply for a payday loan, the lender usually asks for your income information first. The lender will then effectively hold the loan repayment, along with interest, on your next paycheck. This is because you must sign a post-dated check or set up an automatic debit to your bank account.
These loans have higher interest fees than other financing options. As a result, they should only be considered in emergencies, and only if you know you can pay for them.
- Get A Side Hustle
If you already have a stable job, consider getting a side hustle to earn extra cash. There are plenty of side gigs you could take up to make extra cash. Choose something that you know you’re good at. Alternatively, you could get another job where you work part-time. This will be a temporary occupation that will help you reach your emergency fund goal faster.
If you have any talents you can monetize, such as coding, graphic design, video editing, or transcribing, there are plenty of online gigs you could try out. Check out the various online sites that work with freelancers and see if you can find opportunities there. It’s an excellent place to start.
- Sell Assets
Selling your assets is an excellent way to earn a quick buck. If you own any valuable items, consider selling them. However, you must be careful about what you put up for sale.
For example, selling your car below market value isn’t wise because you’re in a rush. It may be better to wait until you find the best offer for your car. The best assets to sell are those that you no longer use. If you have electrical gadgets, ornaments, jewelry, or furniture you no longer use, selling these items will help you get money fast.
- Pause Retirement Contributions
Formally employed people often make retirement contributions. It’s a wise financial decision to set aside retirement funds. Some people opt to contribute extra funds to ensure their retirement fund gathers sufficient money. When they receive a raise or bonus, they prioritize these contributions.
However, if you want to build your emergency fund quickly, you may need to cut back on those contributions and instead focus on building your emergency fund. Remember that you will only be pausing contributions for a while. You can resume making extra retirement contributions as soon as you reach your goal.
- Save Windfalls
Try to inject the extra funds you receive into your emergency fund. People get unplanned extra cash from things like bonuses or tax refunds. Instead of spending this financial windfall, put it into your savings.
It would help if you disciplined yourself to put your cash into the fund before you’re able to use it. Remember that if you put these directly into your bank account, you can benefit from your bank account’s interest rate. This will help you build your emergency fund fast.
- Cut Expenses
It’s usually recommended that an emergency fund should cover approximately three to six months’ worth of household expenses. These expenses include essentials like rent, utilities, food, water, children’s clothes, and commuting fees, amongst other things.
You could cut back on less essential expenses, such as fast food and dinner dates, to put money into savings. Evaluate your spending habits. Then look for where you can cut costs. The more you can cut, the better because you can build your savings much faster.
Starting an emergency fund is easy. Accumulating significant amounts of cash, however, typically requires years. That’s why it’s always ideal to start saving your money early. However, even if you’ve decided to start one later, you can still raise a good amount of money.
To do this, you must have a good financial management strategy in place. This would help you reach your goals for your emergency fund.