Yahoo Finance I’m a Financial Expert: Here’s 1 Move To Make If You’re Just Getting By
If you live paycheck to paycheck, it means you’re scraping by. Your money comes in, and before you know it, it’s gone again — swallowed up by rent, bills and groceries.
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Maybe it feels like you’re on a treadmill, always running but never getting ahead. When payday rolls around, you breathe a sigh of relief. But that feeling doesn’t last long.
Living like this can cause a lot of stress and anxiety. You could wind up feeling guilty for treating yourself or lose sleep worrying about surprise expenses. Meanwhile, the idea of saving for the future seems out of reach.
If this sounds familiar, there is one move you can make that will help you no matter your circumstances.
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The Power of an Emergency Fund
“Building a small emergency fund is THE move to make if you’re struggling to get by,” said Erika Kullberg, founder of Erika.com.
“It may not sound exciting, especially if you’ve never needed an emergency fund before. But when an emergency expense does arise, you’ll be grateful for it.”
When unexpected expenses happen — and they will happen — you’ll be able to use this fund instead of relying on credit or loans. This keeps you from going into debt. And if you’re just scraping by, that’s the last thing you need.
If you suddenly need a car repair, have a medical emergency or lose your job, having that emergency fund ready can be the difference between getting through it and disaster.
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How To Start When You’re Barely Making Ends Meet
Starting an emergency fund when you’re living paycheck to paycheck can be hard, but it’s not impossible.
“The thing is, you can start small,” said Kullberg. “Even on a tight budget, you can aim to save $500 over the course of a few months or less, and you can also use automated savings in order to help you prioritize and meet your weekly/monthly goals.
“Cutting back on non-essential expenses, redirecting any windfalls to your savings and making use of a separate, dedicated account for your savings are all helpful steps you can take to build an emergency fund.”
Start by setting aside just five or ten dollars a week. It’s not a lot, but it will add up over time. Get into the habit of saving, no matter how modest the amount, and set up automatic transfers from your checking account to a savings account that you’ll use for only this purpose.
Set Realistic Goals
Conventional wisdom recommends having three to six months of living expenses in your emergency fund. But that amount probably feels overwhelming when you’re just starting out. If you’re truly just scraping by, that goal can feel about as realistic as winning the lottery.
But don’t let that discourage you. Start small and work your way up. Maybe your first goal is just $500 in the bank. That might cover a surprise car repair or help if your hours get cut at work.
Once you hit that, shoot for $1,000. Then maybe aim for one full month of expenses saved up. Every dollar you save is a win, even if it’s just a little bit here and there. The point is to start somewhere and keep at it. Before you know it, you’ll have a nice little cushion to help you sleep better at night.
Dealing with Setbacks
Life happens, and there will come a time when you’ll need to use your emergency fund. When that time comes and you have to dip into your savings, don’t get discouraged.
Remember, this is exactly why you’ve been building your fund. You are able to handle the crisis, and having the fund there to spend is definitely better than the alternative
Once the immediate crisis has passed, focus on building your emergency fund back up. Treat this as a priority, just as you did when you first started saving.
And use the experience as a reminder of why having your emergency fund is so important. It might even motivate you to aim for a larger safety net this time around. Consider reviewing your budget to see if you can funnel a bit more into savings each month.
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This article originally appeared on GOBankingRates.com: I’m a Financial Expert: Here’s 1 Move To Make If You’re Just Getting By
