Tragedy or crisis can strike at any time. You’ve probably heard the utter importance of establishing an emergency fund in the event that the unthinkable happens over and over again.
Consider establishing an emergency fund and investment in yourself, without one you may find yourself having to liquidate your assets, taking out high interest loans, or pulling money from your retirement fund and being forced to pay the taxes and early withdrawal penalties, all of which are the last thing one needs while facing a crisis.
Here are the three simple ways you can set aside money for an emergency fund:
1 – Acquire Assets
Acquiring assets may seem like it’s the last thing you want to do the save money, but as the old adage goes “you have to spend money to make money”.
Leaving your hard earned cash in a savings account will offset inflation but won’t gather much of a return. To counter this, consider investing in assets that will passively build your income with little to no risk to your savings portfolio.
Assets such as real estate, stocks, precious metals, and foreign currencies with a higher value than the US dollar are excellent places to park your money and gain interest, thus increasing the overall value of your emergency fund.
It should be noted that when investing in assets such as foreign currency, you often have to pay some sort of transaction fee from a bank, which can be up to 20% of the total value of the amount. To offset this, you can use a money transfer service to convert your money at a much lower cost.
2 – Establish A Supplemental Income
One of the quickest and most efficient ways to quickly fill your savings account is establishing a supplemental income on top of your primary income which you receive from your job.
If you have the time, starting a freelance business, such as a blog, or providing some sort of online service is a excellent way to bolster your emergency fund; you may even find that you make more from your freelancing gigs you do for your day-to-day job, which is the prime time to start saving and preparing for the worst.
3 – Start Saving (and Start Saving Now)
As a general role of thumb, financial advisors recommend saving up to half a year of expenses and cost-of-living.
Having six months of cash saved up leaves you with a safety net you can use to cover your expenses in the event that you somehow find yourself unemployed.
To get started, try saving up $500, which is an excellent exercise to bolster your financial fitness training and is a large enough amount to get you out of a majority of financial detriments you may find yourself in.
Setting Aside Money For An Emergency Fund
Thank you for taking the time to make an investment in your future by reading this article, although it is not what most people would like to spend her money on, emergency funds can be the difference between financial freedom and lifelong crippling debt