Many people worry about whether they will be able to afford an emergency. Saving is one of the best things that you can do to prevent any emergency turning into a complete crisis. Here are steps to help you create your back up plan.
Clear Your Debts and Put Your Cards Away
Clear all the debts possible, such as personal loans, credit card and store card debt and car loans. When you don’t need to pay off your debts, you will have more money to put into savings. While clearing the debts, put all your credit and store cards away so that you are not tempted to use them. It is best if you cut up all your cards except one, with a manageable limit, so that you have something in the event of an emergency.
Have an Emergency Savings Fund
While you want to save for your future, you should also have an emergency fund. Opening a second savings account for your emergency fund will help to keep it away from your long term savings. Avoid accepting a card for the savings account – if you do get one, cut it up – this will prevent you from being tempted to dip into it every now and then and only use it in the event of an emergency.
Set Up a Standing Order for Your Savings
Create a standing order so that money goes into your emergency savings fund at least once per month. It doesn’t have to be a lot; just enough to manage with should the car break down or the washing machine stop working. At the same time, set up a second standing order so money goes into your long term saving fund for the future. If you have a standing order, you will be less likely to keep the money in your account ‘just in case’.
Put Your Coins in a Jar
You will be amazed by the amount you can gain from your coppers and spare change. Instead of letting them rattle around in your wallet, put them in a jar at home. This will turn into a second emergency fund, which you can put directly into the bank as it builds up to a substantial amount. By putting your change into a jar, you are less likely to spend it. However, watch out for putting large sums of money into the jar and then taking out money each day! It may be worth to agree that all change at the end of the week goes into the jar to prevent over-spending.
It is possible to save up in the event of an emergency. While credit cards can help, you will put yourself in debt to solve a crisis. Saving money is the best thing that you can do. You will pay for the emergency out of your own money and not have to worry about spending time afterwards clearing any debt that you have caused. Save regularly and you will soon see small amounts accumulate.