Learn Why is it Important to Save Money for Emergency Funding?
Many people want to know how to save money these days. But it’s important to understand why saving is needed before they can earn.
Every one of you and even me need money for many needs such as day-to-day expenses, emergency funds, medical expenses, and so on.
From time to time, the people have no choice but to borrow money from banks. Because they haven’t saved for rainy days, and that’s where money-saving tips can be helpful.
It is even more necessary to learn how to save money at times when the economy is heading into a downward spiral.
Under critical situations like when there are no earnings, our savings can help us survive. Saving money can prove quite challenging.
Bad financial times can come at any time. But it is quite easy for people who have money to survive these difficult times.
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Why is Money Important?
Money has become very important to live a comfortable life today. You can have a lot of choices in your life if you have enough money.
Lack of everything is a problem, and it can be very frustrating to lack something as important as money.
Lack of money may create many life issues such as depression, illness, and poverty. It may even lead to suffering and arguments with your family members.
Though money is not the only solution to solve all our problems, money is always helpful in saving us.
Our finances determine everything in our lives. Some of them are our education, home, where we live, what we eat, what we wear, and perhaps even what kinds of friends we have.
So, always find new chances to earn money through all possible means and for living a standard life.
What is an Emergency Fund?
An Emergency Fund is the funding source maintained by saving money for a particular period of time only for emergency purposes.
Today all people face a kind of emergency in their day-to-day activities without limitation.
It may be anything like:
i.) Medical Emergency
ii.) Unplanned visit to a place (Official or Personal)
iii.) Home Repair
iv.) Electronic Equipment Repair
v.) Major car services
vi.) Situations to handle unemployment.
All these contribute to an emergency situation. We should have backup funds money to overcome these situations. If not, we may fall into big trouble.
Why do I need an Emergency Fund?
Because no one knows when we fall into an emergency time (a few mentioned above).
We need money in critical times to overcome situations without creating more burdens or troubles.
Saving money is a good practice for everyone and helps you solve emergency things. There is no need to rely on credit cards or borrow high-interest loans.
Avoid the habit of taking loans or borrowing cash to handle emergency cases. It will create more trouble and will fall into big debt.
You may create the habit of saving money for emergency needs. Save money as per your financial circumstances (usually 3 – 6 months of regular living expenses).
Here, in this article, I will walk through the steps of strategic money-saving plans to cover your emergency fund requirements.
How to Start Saving Money?
Spending money is simply a matter of putting a fixed amount away every week or month before you have a chance to spend it.
Make it part of your budget by making regular deposits into your savings or retirement account. Practice a “pay yourself first” approach.
Some more tips to help you start saving money today include:
i.) Paying Off Your Debts
The interest you pay on your credit cards is probably much higher than the interest you can earn on a bank account.
So getting rid of that debt is even more important than putting money into the bank.
ii.) Set and Adhere to Firm Savings Goals
Your priority should be savings, not your last. Deposit the first thing you do every payday in your savings account.
Try to deposit 10% of the dollars you earn in a savings account. Put another 10% of your earnings in investments like Investors Hangout, Stock Market, Systematic Investment Plans, etc.
Do this over time, and you may well be on your way to financial security for the long term.
You can set up an automatic transfer to your savings account from your checking account to make it even easier.
iii.) Set Goals in Real-Time
For example, You want to buy a house within three years. Figure out the down payment you will need and start making regular savings deposits to cover it.
You can plan for a daily, weekly, and monthly goal to create finance to meet your needs.
iv.) Try to Save Every Period in the Same Amount
You need to save money for requirements like retirement, buying a house, and education for children.
Determine how much you need to save. Add them, and make every month the appropriate savings deposit.
If your funds don’t stretch that far, your goals may be unrealistic, and are supposed to consider putting off something.
v.) Cut your Costs
When you discipline yourself to spend less, saving money can be simple. Try to keep a precise budget for one or two months.
You’ll be amazed at what you’re spending on incidentals — some of which can be completely avoided if you really look at your needs as opposed to your wishes.
Park tickets? Food in the restaurant? Payments of interest by credit card? High bills for utilities?
Search for ways to start pinching pennies and examine your monthly expenses.
vi.) Settle Credit Card Bills Every Month
Credit cards are most convenient when shopping online. Also, you can pay for an airline ticket, or make a reimbursable job sale.
Pay off your credit cards every month to keep your expenses under control.
This way, you save on the huge interest charges and/or fees and still get the convenience of plastic payment.
vii.) Open a Checking Account that Carries an Interest
Carrying cash can make spending easier. But putting it in an account of interest checking keeps your money safe while putting it to work for you.
And you have the opportunity to make the most of your money on two fronts when used in conjunction with a savings account.
1. Save Money During Purchases
1.) Control your Unnecessary Expenses: Making a monthly budget is the first step in controlling expenses and saving more money. Know the outflow you have.
Once you are aware of your outflow, you will be better able to split it into necessary and unnecessary expenses. To save money, check your unnecessary spending.
2.) Comparison and Bargaining: In India, bargaining is the right of your birth. Recall comparing and negotiating to save money.
When selling a product, everyone keeps the extra margin. To save money, you need to know how to squeeze that margin.
3.) Purchase Online: You will find many websites today like Flipkart, eBay, and Amazon, where products are available at a lower rate or with cashback offers. To save money, you can opt to buy the product online.
4.) Buy Used Products: Usually, it is not advisable to buy the used product, but one of the options to save money is to buy the used product in a tight income situation. Online websites such as Quikr and Olx can help you buy used products online.
5.) Buy Generic Products: Use generic products instead of branded products to save money. The range of branded products is more expensive than generic products. You can save a great deal of money.
6.) Avoid Impulsive Purchasing to Save Money: Before buying that product, avoid spontaneous purchasing to think twice about the product’s need.
7.) Shop with a List: Always go to the shop with a list for shopping. Stick to the list of shopping. If you shop with a list, you’ll be able to save a lot of money.
8.) Look for Sales: Search for discount offers and sales before buying anything. Try to buy goods in the sales to enjoy a good discount.
9.) Buy in Bulk: Be smart to go shopping for wholesale and buy in bulk. You may need some extra money to buy in bulk, and it’s a good idea to save money.
2. Save on Transportation
10.) Cut your Transportation Costs: You need to control your transportation costs in a critical money situation. Try not to use a car/bike while traveling at a shorter distance.
11.) Use Carpool or Public Transportation: You can use a carpool or public transportation to reduce transportation costs further. It will save you a lot of money for sure.
12.) Use of Control Utility to Save Money: Electrical and gas bills are a few high utility expenses. Try to control the use of electrical bills by switching off unused electrical appliances and see a 20 percent reduction in utility bills.
13.) Reduce Mobile Usage to Save Money: Avoid using the mobile phone to save money in a tight income situation. Wherever you need, you can call for the miss.
14.) Select More Economic Mobile and Internet Plans: Selecting more economical mobile and internet plans is another way to save money. If you don’t use the internet frequently, choose to disconnect.
15.) Plan the Most Efficient Driving Route to save money on fuel plan costs. This route may be the shortest or low-traffic-conditioned route.
16.) Car Maintenance: Keep your car healthy by doing maintenance and regular checkups. It allows you to increase your mileage and save money.
17.) Skip Car Wash facility in a tight money situation to save more money.
3. Save on Entertainment
18.) An alternative source of entertainment to save money instead of going out to the cinema. Try other sources of entertainment, either through playing a game or reading e-books.
19.) Plan your Annual Vacation: If you go on vacation in a tight income situation every year, you can either postpone it or plan it to save on transportation costs, hotel stays, etc.
20.) Cancel Unused Memberships or Subscriptions: The gym, club, or magazine you don’t use to save money cancel membership.
21.) Home Entertainment: Find a way to have fun at home. Play indoor games with your family or play mobile games.
22.) Avoid Frequent Visits to hotels, cook at home, and Avoid frequent hotel visits to make home food to save money.
23.) Celebrate with Simplicity: In a tight income situation, by celebrating a birthday or anniversary with simplicity, you can cut unnecessary expenses.
24.) Make Your Own Gift instead of buying from the store to make your own gift or give a low-cost gift while you’re going to a party.
4. Save on Health
25.) Walking and jogging for health is the best exercise. Avoid joining a costly gym or club trying to walk daily to save on medical costs.
26.) Go Veggie: In a tight income situation, select a vegetarian diet. Compared to a non-veg diet, a vegetarian diet is less expensive.
27.) Avoid using Credit Cards and opt for cash payment. Credit card money will always cost you extra credit card use and opt for cash purchase.
28.) Cigarettes and Alcohol are enemies of health and money to avoid bad habits. You have to avoid the bad habit of saving money in a tight money situation.
5. Save at Home
29.) Changing electrical appliances to energy-efficient appliances Energy-efficient appliances can save energy. If possible, go to a home for energy-efficient (energy star) appliances to save the utility bill.
30.) Try repairing broken items instead of replacing them. Another best way to save money is to repair the broken item at a low cost rather than replacing it with a new one.
31.) Home Laundry: You should count every penny in a tight money situation. Avoid giving outdoor laundry clothes.
32.) Shop at Discount Grocery Stores: Change your shopping location where there is a discount. D-mart, you can expect more discounts from Reliance fresh.
33.) Newspaper Expense: Cut your newspaper expense in a tight money situation and read newspapers free of charge online.
34.) Cable Connection costs Give the cable TV connection request to save money.
6. Other Ideas to Save for Emergency Fund
35.) Check and swap your credit card: It is not advisable to use your credit card, but if you use one, make sure it is cost-effective if you don’t swap your credit card to save money.
36.) Pay your bill on time: Pay your bill on time to avoid late fees and penalties.
37.) Check your Debt: Check the condition of your EMI and debt. Switch to low-interest loans by swapping the bank to reduce the interest burden to save money.
38.) Buy off-season Electronic Items: Always buy off-season electronic items. Instead of buying AC in winter, buy it in the summer season.
39.) Automatically Start Saving: Open another saving account, or recurring deposit account to save money.
40.) Avoid using credit cards excessively to save money.
Conclusion
We need money from dawn to dusk, day to day, month to month, and year to year to survive from one moment to the next.
All people need food, clothing, and shelter to travel through time, which can only reach us with the help of money.
When we turn on history pages, we see the role that money has played in people’s lives all along.
The importance of money has increased as one generation has passed it on to another.
Thus, money plays a growing role in our lives. And at the same time, we are not aware of the emergencies that may come on our way.
We should always be prepared to face certain kinds of emergencies. And without creating an overburden or falling into debt by managing a proper emergency fund.
This article has enlightened you with a few ideas on the importance of money. And also, you have learned how to save for daily expenses and emergency use.
