There is a real peace of mind that comes with knowing that you could handle a financial emergency without having to pay for it using a credit card or taking out a loan.
However, if you have had to drain most or all of your savings, it can cause feelings of financial anxiety and vulnerability. The good news is that you've got experience - you built up your savings once, and you can do it again. Here are 5 tips to help.
Revisit your savings strategy - If you've already been contributing a certain amount regularly to your savings, you have a great habit in place. Consider setting up automatic transfers through digital banking, which makes the process easy and efficient. If you've already got automatic transfers set up, consider increasing the amount.
Reduce expenses - This is a great way to help rebuild your emergency funds faster. Can you reduce your cable package or eliminate a streaming service? Have you shopped your home or car insurance lately? Examine your spending to see if there are any expenses that can be cut or eliminated.
Sell items you no longer need - If you've got clothing, books, video games, furniture and other belongings you no longer use, then you may want to consider selling them. It helps you put money in your emergency fund and provides the extra bonus of reducing clutter.
Work a side job to earn extra cash - Whether is a regular part-time job, seasonal work or a freelance gig, the extra income can quickly give your emergency fund a boost. Be sure to ask for direct deposit so your earnings are automatically deposited into your account.
Deposit a windfall - If you are expecting a year-end bonus or a tax refund, plan to put it into your emergency fund rather than spending it.