If you’ve ever done research on financial management or getting out of debt, the topic of savings has likely come up. Though it may seem strange that saving is a solution for debt, it can keep you from going further into debt and even help you out of a jam when you least expect it.
For most, however, saving is a financial task that is put on the back burner for one reason or another. If you, too, believe that having a stash tucked away for unforeseen circumstances is something you’ll get to when you have the time and money, maybe you should consider the importance of an emergency fund and what happens when you don’t have one.
Why You Need a Stash
Life is unpredictable. You can go years without having a financial emergency and then one day something you never planned for happens. You lose your job for a year, your car breaks down, you suddenly have to move, or some other emergency happens, and the only way to resolve it is if you have cash. When you have an emergency fund, you can withdraw funds from the account to handle your emergency and replenish it when you have the chance.
For those who don’t have an emergency stash, relying on the help of others to stay afloat is necessary. Whether that means asking friends and family or applying for a loan, it puts you in a position where you’ll owe someone else – with interest.
A Backup is Still Ideal
Though the ideal solution for handling financial emergencies is to have an emergency savings, knowing where you can go for backup is ideal. Why? Well, if you don’t have an emergency savings as of yet, you may need to borrow funds to cover your problem. Even for those who do have money tucked away, the emergency could surpass the money you have available. If friends and family are unable to help you out, that’s where short-term loans come in handy. Short-term loans like those provided by online lenders, like Blue Trust Loans, give eligible applicants the chance to receive more than a thousand dollars in their account within 24 hours.
If borrowing funds when you’re in a jam, however, you must remember to do so responsibly. Taking out a loan you can’t afford to repay or even asking a family member for cash and thinking you can get over on them are both poor habits that can ruin your credibility and put you further into debt. Therefore, these backup plans should only be used if you can reasonably fit them into your budget to repay.
Building a Savings
You never know when you might need to shell out hundreds or even thousands of dollars to handle something. A trip to the hospital, a car insurance deductible, a student tuition, a higher than normal energy bill, anything could result in you needing to put your hands-on money right away. Here are some method for building an emergency savings whether you think you have the funds to do it or not:
- Sell Things – you have a ton of things in and around your home that you’re probably not using that you can put up for sale. Some items that could get you a good return might include mobile phones, computers and laptops, jewelry, and household appliances.
- Check Your Spending – though it may appear that you don’t have any money to put towards savings, sometimes it’s just a matter of looking deeper. Often, money is spent on things that are unnecessary which can be removed from the budget. Common areas of overspending include food, cosmetics, entertainment, credit cards, and more.
- Earn some money – If you’ve double-checked your spending and have sold all that you can but still want to boost your emergency savings you can find ways to earn money. There are a ton of ideas both off and online including becoming a blogger or a web developer, or doing odd and end jobs for neighbors or tutoring for a fee.
Many wonder if having an emergency fund is worth it. As you can clearly see learning to save can help you to climb out of debt as well as prevent the need to go further into debt. Though it is beneficial to be aware of backup plans and financial resources for when your funds aren’t enough, an emergency savings fund is a vital component to financial management that should be a priority for everyone.