In this tough economy, it can be challenging to just set money aside for items needed daily, so saving money for anything more than the basics can feel impossible — especially around the holiday season. This is why most people find it difficult to build an emergency fund.
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If you are struggling with bills, let alone setting aside the recommended three to six months’ worth of expenses, what can you do to begin the process of saving for an emergency? Believe it or not, there are a few easy steps to get the money ball rolling.
Step 1. Open a Seasonal Savings Account
Many banks offer seasonal accounts meant to save for holidays like Christmas. These accounts give you reduced access at a better rate, charging a hefty penalty each time you withdraw more than permitted. Since emergencies don’t occur often, a seasonal account could make sure you’re saving money by touching it only when needed.
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Step 2. Automatically Direct Deposit Into Your Savings
Another way to easily save cash for a rainy day is to have a percentage of your income directly deposited from your paycheck into a savings account. If you have access to your funds in your checking account, you’re more likely to spend them. Having your money set aside for you — and forgetting about it — makes a huge difference in your ability to save.
Step 3. Sell Unused Items
Most people have items around the house that they no longer use. Rather than throw them away, start selling them. Outlets like eBay can help you get rid of items from the comfort of your home, but you can also take your clothes to a consignment shop to have them sell items for you. After earning this money, add it to your savings account immediately — the effort made will have been wasted if you spend it.
Step 4. Use Cash and Save Your Change
Another shrewd way to start saving is to spend with cash then save your change. Many people are accustomed to buying items with plastic (debit or credit), but you can opt to pay with cash instead, then save the change and let it add up. You’d be surprised by how quickly you can have a few hundred dollars added to an emergency fund this way.
Step 5. Spend Less (Duh)
The last tip seems like an obvious one that is too challenging to accomplish when money is tight. However, most people spend more money on unnecessary items than they think. Whether you’re eating out twice a week or buying gas at an expensive station, every dollar overspent could be added to an emergency fund.
So take time to look at where your money is being spent and begin to cut back. Saving $10 here and there could help you put a lot away in the long run. Obviously, these savings options won’t help you set aside thousands of dollars in a few months, but they can help you get used to saving emergency money and give you a starter stash to build on.
And when you do get a big chunk of cash (i.e. bonus from the job, tax refund, etc.), rather than buy the TV you’ve been wanting, put it into your emergency fund. This way, you can ensure you have money available when you need it.
Caitlyn Moorhead contributed to the reporting for this article.
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This article originally appeared on GOBankingRates.com: 5 Easy Steps To Build Up an Emergency Savings Fund
