fbpx Skip to main content

This post may contain affiliate links which may compensate us based on your interaction. Please read the disclosures for more information.

An emergency fund can help you out when pricey, unexpected expenses come your way.  

Image source: Getty Images

No one likes dealing with car issues. But if you own a car, problems happen — even if you keep up with regular maintenance. I recently found myself dealing with car troubles, which resulted in a nearly $600 car repair bill. Luckily, I’ve been committed to boosting my savings, so while it was frustrating having to take time out of my busy week to get my car fixed, I was prepared. Here’s how my emergency fund saved the day.

Extra expenses can pop up when you least expect them

Car issues and other costly life problems usually appear when we least expect them. It goes something like this: You’re busy going about your day, and suddenly, your car won’t start. That scenario happened to me earlier this week.

My car is 10 years old, and I have no idea how old the battery is, so I assumed I needed a new one. It turns out I needed a new starter. All is well now, but the repairs cost me nearly $600. While this is an affordable repair bill, I’m thankful I had the financial means to pay it.

Over the last year, I have remained committed to my savings goals. I’ve been regularly stashing cash in my savings account for future expenses like this, so I didn’t have to worry about taking out a loan or racking up credit card debt. Instead, my emergency fund saved the day.

An emergency fund can make a difficult situation easier

Most of us know that emergencies can occur any time and usually come with an expensive bill. But that doesn’t mean we’re always financially prepared to handle these situations. When we’re not prepared, it may mean that we have to take on expensive debt.

Having an emergency fund available can allow you to handle costly situations more easily — and you’ll likely feel less stress when you get a surprise bill if you already have money set aside.

If you don’t have much extra money, that’s okay! Having a small emergency fund is better than having none. Work with what you have. If you haven’t yet funded your account, you may want to consider doing so. This way, you have a financial back-up plan for when life gets interesting.

How to make your savings goals happen

If you struggle to save money, you’re not alone. Even if you have minimal extra funds, you can do a few things to set yourself up for success.

The following suggestions may help you reach your savings goals sooner:

Open a high-yield savings account: Where you store your extra money matters. High-yield savings accounts are an excellent place to keep your emergency fund. Having a separate bank account for these funds will make you less tempted to spend it all. Plus, you can earn interest while your money sits in the bank. Put your savings on auto-pilot: Many people struggle to save because they forget or spend most of their money and have none left to stash away. To avoid these scenarios, put your savings on auto-pilot. Set up automatic transfers, so extra funds are regularly transferred to your savings account. You’ll make your life easier by doing this. Start small: You don’t have to start with a big goal. Everyone has to start somewhere, and it’s okay if you need to start small. The most crucial part is that you get started. Consider this a gentle reminder to start outlining your savings goals now.

It’s never too late to start saving money. Whether you’re ready to save $100 a month or $500 a month, it will make a difference — and your future self will be glad. If you’re looking for additional guidance on managing your money, you may find these personal finance resources helpful.

These savings accounts are FDIC insured and could earn you more than 17x your bank

Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts can earn you more than 17x the national average savings account rate. Click here to uncover the best-in-class picks that landed a spot on our shortlist of the best savings accounts for 2023.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

 Read More 

Leave a Reply