How to Build an Emergency Fund

I guess you must have heard the cliché “those who fail to plan, plan to fail?”  .If this is true, then the need to plan is imperative. Although no one wants to contemplate the worst-case scenarios, the reality is, emergencies and unforeseen circumstances do happen. So, what’s your best bet considering the volatile economic situation if a loved one is hospitalized and you have to raise money to pay for it?  Or, what happens if your car breaks down, and you need an emergency car repair loan?

Let’s face it, it’s one thing to have an emergency fund, and another to have a plan to put that fund to good use. If you have been wondering how to go about building an emergency fund, this article is for you.

Steps to Build an Emergency Fund

Do away with unnecessary expenses

Want to jump start your emergency fund? Then you’ll have to make some critical decisions, and they may include canceling out subscriptions for Netflix, Amazon Prime, and other recurring expenditures that are not so important. If you’re having difficulty canceling a long-term internet subscription, you may want to opt for services that cost less.

Restructure your budget

Restructuring your budget is one of the smartest decisions you can make during emergencies. And this is only normal since you’ll have to depend on your emergency fund during this period. Trust me; you’ll want to save as much money as you can during this challenging time.

Leverage on unemployment benefits

If you’re not aware of the myriads of unemployment benefits out there, now would be a perfect time to learn about them. The truth is, unemployment benefits can save you a lot of stress. With unemployment benefits, you may not have to dig too deep into your emergency fund. More so, you can learn about these benefits from local unemployment offices in your region.

Strategize on how to break the news to your family  

Without a doubt, emergencies aren’t always the best of times for families. But then, breaking the news to them is even worse. But hey! You have to do what you have to do, and that means planning on how you’re going to tell them about it, this would make it easier for you.

Set up a job-hunting blueprint

Desperate times, they say, call for desperate measures. So, if you’re serious about managing emergencies, planning on how you would secure a new job should be on your list. You can quickly start by setting up your profiles on job sites or better still, reach out to your network.

Make the most of your downtime experiences

Although maintaining a positive attitude during a difficult time isn’t as easy as it seems, you need to make an effort to ensure that nothing discourages you. Consequently, finding a project that keeps you busy will help you combat the financial stress you may encounter during job hunting.

In a nutshell, there is a list of things you should do just in case you lose your job and have to depend on your emergency fund for survival. Nevertheless, as you start to plan, you would want to expand the list to cover for other unforeseen circumstances. The example above is just to give you a head start at where you should be looking.

What circumstances should you plan for?

So, you have read all the information above, and you are convinced that you need a financial emergency plan but don’t know where to start. Well, I’ll suggest you start with the big ones. Cases like the death of a loved one, loss of your significant assets like a car or house should feature prominently in your financial emergency plan.

This doesn’t mean other less significant emergencies shouldn’t be featured; it only means you’re giving priority to what needs to be tackled first. But don’t forget that as you build your financial emergency plan, you shouldn’t shy away from adding to it. Trust me; no emergency is too small to be featured on your list.