When it rains, it pours. Are you financially ready for anything? If the answer is like most people, it may be anything other than yes. Check out these four tips for building an emergency fund from a Maggi Tax financial advisor.
In emergent situations, it is possible to request emergency loans or withdraw from your savings but to avoid reactive decisions, having an emergency fund can bring peace of mind. Creating an emergency fund is a foundational step in financial security. Try adding consistent amounts to cover three to six months’ worth of living expenses. Did that take your breath away? No worries, start with a small amount and commit to adding more monthly. Anything is better than nothing when it comes to savings. This leads us to the first tip.
Automate your savings. By setting a specific monthly amount to automatically transfer into a savings account, you will not be tempted to spend it. After setting it and forgettin’ it, now is the time to create a budget. Some choose to use budgeting apps though even a simple Excel can help calculate your income and expenses to determine a monthly overview. This process will help you visualize where your money comes and goes. Can you cut back on any unnecessary spending? Take a look at where you may be able to shave off costs (we’re looking at you, food delivery fanatics) so you can add more to the savings nest egg. Eager to increase your income? If a side hustle interests you, consider picking up a part-time gig or doing freelance work. Any extra income earned can boost the amount of savings.
Of course, this list is not exhaustive. If you’re interested in working with a professional to solidify your financial goals, contact us here or call (727) 799-1701 to schedule your appointment. For over 30 years, Maggi Tax has guided Tampa Bay residents with all aspects of their financial well-being.