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No matter how well you plan, life will always have surprises in store, some good, some bad. The good news, however, is that when it comes to financial curveballs, there are a handful of simple tips to help build an emergency fund so you can deal with matters in a responsible and effective fashion.
Most people have a love/hate relationship with their bank. And while it’s true that some banks don’t do themselves many favors in the PR department, most have convenient features and functions that customers don’t even know about.
Nearly every bank allows you to automatically siphon a set dollar amount into savings on a regular basis. For instance, if you get paid on the first and 15th of every month, you could funnel $50 per check into savings without having to worry about remembering or processing the transactions. This is a quick and easy way to methodically build your savings that, over time, will financially prepare you to handle life’s surprises.
This next tip harkens back to your youth, when you would collect spare change to fill your piggy bank. Although it might seem too simplistic, even childish, you would be shocked how quickly spare change adds up.
At the end of every day, start placing your silver spare change into a container. This technique might seem like it operates at glacial speeds, but most people drastically underestimate how much change they walk around with on a daily basis.
Think of it like this: You look in the mirror every day as you get ready for work but never notice how much your hair grows from one day to the next because it happens at such small increments. However, after a few months, you suddenly realize that it’s time to get another trim. Your spare change collection will feel very similar, not making much difference in the short term but really adding up over time.
People use their tax refunds for a variety of different reasons. As tempting as it might be to treat yourself with that refund, however, allotting a certain amount to your emergency fund can give your savings an annual boost that otherwise would take quite a while to accumulate.
Between automated savings, spare change and your tax refund, building an emergency fund can be simple and effective if you’re deliberate and solution-oriented. Take the time to sit down with your budget, trim away the fat and establish a game plan that will help you address any financial surprises life might have in store for you down the road.
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