Are you financially prepared for a $500 emergency? If your answer is “no,” you are not alone. According to a 2018 Federal Reserve report, 4 in 10 adults would not be able to pay for an unexpected $400 expense or would need to sell something or borrow money to cover it.
While life’s unplanned expenditures can hit us hard, having an emergency fund provides a small cushion to soften the burden.
Here’s how to save $500 in one year to bolster your emergency fund.
Think about this savings goal as a monthly bill:
$500 yearly goal / 12 months in a year = $42 monthly saving goal.
Now, review your budget and find an expense to cut out and another to scale back on to save at least $42 every month that you can transfer over to an emergency fund.
Here are the three steps to focus on:
What is something I can completely stop spending money on to save $21 every month?
What is something on which I can spend less money to save $21 every month?
Need more ideas for how to save? Here are 54 ways to save money from America Saves.
Be sure to put your savings into a separate savings account to keep emergency funds away from your day-to-day money.
If you want to automate your savings plan, you can schedule a recurring monthly deposit of $42 from your checking account to your savings account, or if you get paid through direct deposit, you can set up a direct deposit of $42 from your paycheck straight into your savings account.
Money Management E-newsletter: April 2019