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A car crash, an unexpected medical bill, a broken appliance, a loss of income, or even a malfunctioning cell phone are all examples of unforeseeable emergencies. No matter how big or small, such troubles always seem to happen at the worst times requiring your financial input. This means you need emergency money now. Right?
In fact, creating savings is one of the ideal means for financial survival. In the event of an unexpected incident, the emergency fund helps secure properties and retain stability. You can recover faster and get back on track toward your broader savings objectives by setting aside money – even a modest amount. However, this is not always possible. The trouble can be bigger than your personal capabilities. The recent pandemic proved so. The global redundancies negatively affected not only governmental but also personal saving levels. It became quite difficult for people to recover without financial aid. How to get emergency money has become a popular topic.
So Where to Get Emergency Money From?
- Use Websites or Online Cash Apps
You may now get money online in a variety of methods. Gone are the days when borrowing money from a credit institution required you to queue and go through a lengthy process.
Applying for a loan online through websites or apps is one of the finest ways to get fast cash when you need to pay off emergency bills. The funds you require will be promptly credited to your account in as little as a few hours. This can be of assistance, especially if time is of the essence.
2. Request for Government Assistance
Applying for government help is another way to get money to meet an unexpected need. However, this is frequently contingent on the existence of a financial aid program in your state or locality. Also, you may have to wait a long time, especially if there is high demand for governmental assistance.
The fact that government support is sometimes in the form of a grant or gift is an advantage. It is not a loan you have to pay back with high interest. The federal government usually offers funds with lower interest rates than private financial institutions.
3. Pawn or Sell your Jewelry
If you have gold jewelry that you do not wear anymore, consider pawning or selling it. If you are taking this path, though, choose the second option and sell your jewelry. You will be able to generate more money from selling jewelry. However, if you are sure you can get back this collateral quickly, then pawn it.
4. Borrow Money from Family and Friends
Borrowing money from friends or family members is one of the finest ways if you need emergency money now. Close family members may be more than willing to assist you in getting through the financial difficulties you are facing.
One perk of borrowing money from friends and family is that you are almost certainly not going to pay any interest. When your family and friends know you well and trust you, they may even offer you very flexible payment conditions. This can be beneficial, particularly if you are having difficulty repaying the debt. However, there might be tax implications. Therefore, you need to deal with this option responsibly.
5. Apply for a Cash Advance
Many banks and financial institutions can provide you with a cash advance or financial aid. You may request a cash advance from your employer if the latter is generous enough. Anything that requires money can be paid for with a cash advance. You will be able to acquire the aid you need, whether it is for bill payment, a car payment, or even something as simple as a house repair. Though, when you are in the throes of a financial emergency, this is one option to get cash quickly (even if it will cost you later). Therefore, cash advances should only be utilized as a last option.
Building Emergency Fund: FAQs and Things to Consider
While an emergency fund will not fix all your financial difficulties, it might be a wonderful opportunity to start getting your finances in order.
How Much Should Your Emergency Fund Be?
The emergency fund does not have to be a large, inaccessible amount. You can start with a small amount and increase it every month. There is no certain amount for everyone. It varies and depends on people’s financial means and lifestyle.
Naturally, emergency needs differ from one situation to another. Therefore, financial experts recommend the emergency fund to hold the potential expenses of 2 to 7 months.
Where Should You Keep Your Emergency Savings?
Your emergency fund should be in a safe place. You should not have very easy access to it nor an impediment. The best place is simply a checking account or an account that comes with a debit card or check-writing privileges.
To keep it short, you should not keep emergency savings in your regular savings account. It should be separate.
When Should you Refer to Your Emergency Fund?
When an unexpected expense comes up, you may think that it is an emergency. However, this is not always true. You need to ask yourself whether you really need to use your emergency savings. Unless there is no other way of getting out of the situation, you should not use the funds of your emergency account. Think of enquiring a loan or getting money through the ways mentioned rather than touching your savings immediately. People are usually more responsible towards others than themselves when it comes to debts. Therefore, be cruel to yourself while thinking of pulling out from your personal savings.
Always remember that emergency savings will:
- add to your confidence and guarantee that you will quickly recover from financial problems.
- help lower stress level and anxiety – coming up against unexpected payments is really maddening. If you do not have an emergency fund or savings, you will always think of what to do when facing a crisis.
- help to be prepared for unexpected expenses – our life is full of unexpected circumstances. It is nobody’s purpose in life to always anticipate and solve worst-case scenarios. However, one should be ready for.
- enable you to protect yourself against a loss of income – none of us can imagine when we might lose our job or face a severe drop of income. Unfortunately, this can happen at any time and have very severe consequences for our finances.
- help to avoid debts – if you do not have an emergency fund, you will have to borrow money in the case of an unexpected expense or a drop in income. Therefore, have the fund and keep it in mind as the last solution.
- improve your financial well-being – no need in that case to rely on anyone except for your own financial abilities. The saving can be used as collateral for borrowing new funds if used in a smart way.
How to Build an Emergency Fund?
Unexpected expenses can be traumatic. They have major financial ramifications if you are not in good financial shape. Therefore, if you ought to survive and build your emergency fund, follow the following five steps:
1. List Down Your Monthly Earnings and Potential Expenses
Use a worksheet or a piece of paper to track your monthly income and expenses. Include recurring and periodic expenses like rent or mortgage, utility bills, and daycare, school fees as well as estimates for any out-of-pocket expenses of leisure activities or certain healthcare processes.
Use an electronic worksheet or an accounting notebook to trace your monthly income and expenses. List down recurring and periodic expenses. This may include your mortgage, house rent, loans, utility bills, daycare, and school fees. You should estimate any out-of-pocket expenses such as leisure activities or certain healthcare processes.
2. Design a Plan to Begin Saving
Setting a goal goes hand in hand with devising a strategy to attain it. Specific and measurable milestones to progress toward the desired goal could be part of your strategy. One specific aim, for example, could be to save an extra $300 over the next six months. This amount can be added to the emergency fund.
3. Save for Emergency Situations
An emergency fund should be sufficient to cover two to seven months of living expenses. You may be able to plan for the smaller sum if you believe your income is stable. You can also do so if you have access to a home equity loan or any other source of financing. You should save more if your credit is nearing its maximum limit and your income prospects are uncertain.
4. Ensure your Emergency Fund is Not Easily Accessible
Ensure that the rainy-day money is kept separate from your other accounts. Simply setting down the purpose of an account can prevent you from using the funds for any other purpose. Your emergency fund should be kept in a liquid account. Remember, you might find yourself in need of emergency cash. This is while a liquid account is an account where your cash is easily accessible. It can be a standard savings account at a bank or credit union. Both can pay a return on your deposit and allow you to withdraw funds without penalty at any time. The fact that the money is easily accessible DOES NOT MEAN approaching the fund the moment you feel like an emergency. If you are thinking about alternative possibilities, such as a certificate of deposit, money market fund, or mutual fund, be sure you know how easily you can access your money in an emergency.
5. Stick to Your Saving Habit
This is often the most challenging aspect. It takes effort and time for people to develop certain habits. Saving for an emergency fund or any other financial goal is a habit. However, when you prioritize saving, building an emergency fund will be a nice habit. You will feel satisfied when you start watching your funds grow. Sticking to the plan will be a lot easier if your goals are reasonable and reachable. Therefore, set up a regular transfer to your saving account․
No need to get any heck of a shock. Instead, budget, save, and always consider ways to make emergency money.
