3. Create a Savings Goal
Now that you’ve figured how much money you need to live, you can set an amount which you’d like to save up. It’s recommended to start saving 3 months’ worth of living costs to begin with. Then, grow it to 6 months’ worth. However, some financial experts would argue that you should have at least 8-12 months’ worth of living costs saved up to feel truly secure.
4. Set and Forget
It can feel intimidating trying to save up as much as 12 months’ worth of funds, especially if your finances are already tight. It can help to decide an amount to save and then set up automatic monthly transfers to your bank account. Then, you don’t even have to think about it. The best time to set the transfer is a few days are payday, so the amount will never wipe you out. You can automate your savings through your bank, or by using a handy app like Digit.
5. Don’t Forget to Replenish What You Use
Once you’ve spent a portion of your emergency fund, don’t forget to pay the money back into it. If you used the money because you lost your job, make repaying it back a priority once you get new employment. This way, you won’t need to rely on credit card debt during your times of need. Instead, it makes sense to make yourself financially secure.