Not having an emergency fund is the first step into the deep hole of debt.
With the economy forcing people to take a hard look at their finances, more people are realizing that they need to
,but how do you find the money to begin an emergency fund when you are just making ends meet?
Here are seven simple ways to find money to begin an emergency fund, which will allow you to create that all-important buffer for your finances.
Rearrange Your Current Costs
The least painful way to create an emergency fund is to rearrange the way you currently spend your money without actually giving up anything.
Chances are that you are paying much more than you need to be for a lot of the services you currently subscribe to such as cable TV, Internet access and phone service.Calling these services with a
and asking for a better deal will often reduce the amount you are paying while keeping the exact same services you currently get.
The same can be done with home and car insurance as well. It usually costs companies much more money to find a new customer than it does to give you a discount, so they are often willing to give discounts to keep you from going to the competition. You can then take the money you save to begin your emergency fund.
Play Saving Games
There are a number of saving games that you can play to get your emergency fund started. The most common of these is creating a money jar where you empty all your loose change at the end of each day, and collect the money at the end of the month to use for your emergency fund.
A wide variety of
can serve the same purpose.
Increase Your Income
If you have already tapped all the ways that you know how to save money, another option is to make some extra money.
There are a number of ways that you can accomplish this, including finding a part-time job, doing freelance work or starting your own side business.
You can begin a number of jobs that
to create, and the extra money gained can become your emergency fund.
In all likelihood, you have way more stuff in your home than you need. A simple walk around you home looking into the closets, garage and other storage spaces should readily confirm this.
If you haven't used it in the past year, you probably don't need it. Instead of keeping it in storage and letting it gather dust, have a garage sale, put it up for sale on Craigslist or list it as an auction on
. Set aside any money earned to initiate your emergency fund.
The reason that the IRS takes money out of people's paycheck each month is because if they didn't, they know that most people wouldn't have the money to pay their tax bill come April 15. They want to make sure they get their money, so they take it upfront.
You should have the same attitude with your emergency fund and pay yourself first when your paycheck arrives. Have a set amount taken out of each paycheck before you pay any other bills that gets transferred into your emergency fund.
Another way to accomplish the same goal is to finish paying off a recurring bill such as a credit card or car payment. Instead of using this newly freed up money to buy new things, keep paying it, but this time to yourself earmarked for your emergency fund.
Set Up an Account
When setting up an emergency fund, you will want to open up a separate account so that the emergency fund money isn't mixed in with your regular spending money since mixing makes it much easier to spend the emergency fund money on nonemergency things.
Online banks often offer
, which can get your emergency fund started just for setting it up.
Pay Yourself for Things You Use
One of the easiest ways to always have an emergency fund available is to learn to pay yourself to use
Getting into this habit ensures you have a mini emergency fund for all the things you use on a regular basis and puts you in a position of never having to buy things on credit again.
Embrace one of the above ways to begin the emergency fund, and give yourself a bit of breathing room.
Jeffrey Strain has been a freelance personal finance writer for the past 10 years helping people save money and get their finances in order. He currently owns and runs SavingAdvice.com.