emergency savings

How to Build an Emergency Savings Account


Picture this, you’re driving down the road enjoying your day, and suddenly, you hear a loud noise on the exterior of your car that sends you careening into a ditch on the side of the highway. You’re standing on the side of the road trying to figure out what you’re supposed to do about a popped tire, and then you realize you don’t have the money.

It’s during these times that most of us wish we had an emergency savings account that we can dig into to cover these random life events that can happen. Do you know how to build an emergency savings that you can dip into whenever you need access to a cash reserve?

Here are some tips that will help you to achieve your savings goals one step at a time.

What is An Emergency Fund?

Before we jump into how to begin building your emergency fund, you need to know what it is. The fund is a type of cash reserve you set aside and don’t touch unless you have unplanned emergencies or expenses that will need to be covered financially.

Things that typically arise that you don’t plan for but have to cover, regardless of when they happen, include unexpected bills or accidents, such as broken windows or air conditioning units that need to be repaired.

It’s anything you’ve not accounted for but can’t put off paying for because it will affect other areas of your life. You need this because when your finances are strained, it can cause additional stress you don’t want to deal with.

How Much Should You Have?

It’s understood that there are other things in life you will need to cover. Therefore, the amount of money you set aside for your emergency fund will greatly depend on the other expenses you have monthly.

Overall it depends on your specific situation as to how much you need to put aside, but you should first determine past circumstances you needed to cover in the past. Understanding past circumstances can help you figure out how much you will need to set aside moving forward.

Even if a small amount comes from each paycheck, you’re setting aside something in case you need it. Here’s how to build an emergency fund you can count on when you’re in a challenging situation.

Set Your Savings Goal

The first thing you can do before you begin to build your savings account is determine what your goal is. If you have a specific savings goal you’ll want to achieve; it can help you to remain motivated to achieve the goal.

The goal you’ve set out to achieve should be attainable because when it’s out of reach, it can cause you to lose sight of the goal. Which in turn causes you to become less motivated to reach the goal.

There are several tools out there you can use that will help you determine how much to save and the amount of time it will take you to reach the goal. Understanding how long it will take you to achieve each goal will make it easier to set realistic ones.

Have a Deposit System

When you have to consciously think about making contributions to an account, it’s easy to let it slip your mind. In this case, it’s best if you have a system that will allow you to automatically contribute to the savings account.

Most banking accounts have a function that allows you to set an automatic transfer between your accounts, which would take place each week or monthly, depending on what you’ve selected. If there comes a time when you need to stop the automatic payments, you can stop this within your mobile banking app.

Secure a Personal Loan

Sometimes no matter how hard you plan for things that could happen, you simply don’t have what you need to cover it. In this case, you can apply for a personal loan to start your emergency fund and then work on paying it back each month.

It’s quick and easy, and you can select when you pay it back, whether weekly, monthly, or more. By doing this, you have access to the funds you need to handle the emergency immediately without delay.

This takes some of the stress out of dealing with an unexpected event in your life.

Keep Track of Your Progress

The next thing you should do as you continue building your cash reserve is continue to monitor your progress. Sometimes slow and steady is the name of the game, but if you don’t know how you’re progressing, it can become more challenging to remain motivated to push forward and continue dedicating funds to this account.

You should check your savings account regularly to see how it is going and the interest it’s yielding over time. Again, depending on the banking notifications you’ve set for your account, you can receive an email each time the amount within the account changes.

This will keep you in the know about what’s going on within your account and how things are growing over time.

Emergency Savings: How to Build Emergency Savings You’re Proud Of?

When it comes to your emergency savings, you understand you need one, but that doesn’t mean you understand how to go about building one. We recommend that you set goals that you’ll want to achieve financially and monitor your progress toward these goals over time.

Or you could apply for a personal loan. If this sounds like something you want to do, apply now with Tekaloan, and don’t forget to check out the blog for other financial advice and tips.

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