The financial stability of many Americans is quite poor. It’s estimated that more than half of all Americans would have trouble handling an emergency expense of $400. Many Americans spend as much or more than they make each month. This precludes the accumulation of emergency savings. The lack of emergency savings is problematic because most financial experts recommend having between three and six months of expenses stashed away for unexpected events. In spite of the problems many Americans have building emergency savings, it’s not impossible to achieve. Here are a couple of steps Americans can take to help build their emergency savings.
Cut Back on Expenses
One way to have more money for an emergency fund is to cut back on expenses. Cutting back on a daily latte habit could save around $100 each month. While that will help a bit, it’s more likely that cutting back on bigger items will help even more. For example, living in a huge apartment when a smaller one will suffice could cost several hundred more each month. Eating out every day could also add up to hundreds each month. By cutting down on the money spent on housing, transportation, and food, it’s frequently possible to free up several hundred from a monthly budget. Once that’s done, it could be just a few months before an emergency fund is completely funded.
Find Other Ways To Make Extra Money
The other side of the coin when it comes to building up an emergency fund is the earning side. Many people think they have to get by only on what their employer pays them on a weekly or monthly basis. This is not always the case. Those who work on an hourly basis might find it worth the effort to ask for extra hours on their jobs. Many Americans are also taking up side hustles. This can involve working at a restaurant or retail establishment on the weekends. It might also involve offering a service like mowing lawns or watching pets for people who are out of town. There are many options for earning money on the side, and those who make enough to pay all their bills without extra income could use any new money they earn from side hustles to build up an emergency fund.
Building an emergency fund might seem like a daunting task. It doesn’t have to be. By focusing on a combination of making more money while spending less, it’s possible for most people to start building up a stash of emergency savings. Setting a monthly goal can be a great way to visualize progress and ensure that the fund builds over time.