Emergency fund written on a piggy bank.
Saving money is a good habit and creating an emergency fund is even a better one. This fund serves as a cushion during financial emergencies and keeps you stress-free even when you are not really struggling with money. In a crisis situation like the pandemic we are facing today, an emergency fund can be your lifeline to managing big and small money woes. But most of us would have already used up our savings at present, considering that pay cuts are happening everywhere and the prices of commodities are skyrocketing. Still, you can’t just use up all your funds and sit around because things are likely to get tighter in the post-pandemic phase.
Rebuilding your emergency fund during lockdown surely makes sense for everyone. Saving up is surely important but may not be possible at this point in time. Rather, you will need to take a more proactive approach such as exploring small loans from Personal Money Network to create a financial cushion right now. Implementing some smart money ideas can keep you afloat during the troubled phase and you can gradually consolidate your position as things turn better. Here is some good advice for getting your emergency fund back on its feet during the crisis.
Get a fresh start with small loans online
The biggest challenge for rebuilding your savings is the first step, particularly if you have used everything up and need to start from scratch. A proactive approach is the only way to get started. Small loans online is a great way to get a fresh start because you cannot expect to have a healthy fund fast enough with pay cuts and increased expenses at this stage. Rather, a small online loan is easy to apply for, quick to be approved and gets money in your account sooner than you expect. Moreover, you can get one even with bad credit. And since it is a small loan, you needn’t worry about piling up a major debt. You have enough in your emergency fund and can repay the loan according to the agreed terms.
Chase refunds that you are entitled to
Getting your own money back is the smartest way to replenish your emergency savings during the lockdown phase. If you have any refunds due, now is the time to chase them and get what you are entitled to. It may be a gym membership or club fee you had paid just before the lockdown or a holiday you had booked for the summer. Be persistent and patient because it is seldom easy to get your money once paid to someone. But businesses surely have to return your money, though conditions for refunds may apply. Still, even the amount you get after deduction can be of great help. The money should be put where it belongs, a fund that you can use when you have financial glitches or pressure.
Claim the benefits you are allowed
During the lockdown, the government is providing special benefits and relief packages for the citizens. These include employment and support allowance, statutory sick pay, jobseekers’ allowance and more. But you need to be aware about the options you have so that you can claim them and use the money for securing yourself. Check the ones that apply in your case and also understand the procedure for claiming them. Once you get these benefits, focus on saving them up rather than spending.
Get a step ahead with financial planning
Apart from the proactive measures such as replenishing your emergency fund with a loan and claiming refunds and benefits, you need to stick to the good old financial planning approach as well. Start by segregating needs from wants and prepare a list of expenses that you absolutely have to bear. Consider cutting corners where you can; for example, you may give up premium subscriptions and opt for free versions, save on utilities, and stay away from luxuries while creating your monthly budget. Good financial planning can help you save up and add to your emergency fund.
Clear the credit card as quickly as you can
You may have got payment breaks for mortgage, rent or other debts during the lockdown but you can expect them to end soon. It is advisable to clear out small debts as quickly as you can otherwise you may end up damaging your finances even further. Clearing off your credit card should be your top priority as it has dual benefits- while you cut down the debt stress, you can save the interest money as well. The money saved can be utilized for consolidating your emergency fund in the long run. A money detox that aims at reducing spending and simplifying your finances is the right way to go.
Be smart with shopping
Another good idea to rebuild your emergency fund is to save while you spend. Shopping smartly is the way to go. Even as you stock up essentials for your daily needs, look for deals and offers for economizing purchases. You can consider shopping online because there are plenty of sites that have the most amazing offers for first-timers and repeat buyers. Prioritize ones that give free shipping and delivery because this is an extra expense that is easy to trim. However, be judicious and don’t indulge in impulsive buying just for the sake of cinching deals.
Don’t underestimate the value of an emergency fund!
The current crisis has taken the world off-guard, with businesses going haywire and personal finances getting out of control. The circumstances have been totally unprecedented and an emergency fund is the most effective thing to steer out of trouble. There is a lesson to be learned that you should have at least a few months of your wages in this fund to get through situations like the current one. Primarily, your emergency fund should be liquid cash that you can access as and when you need it. If you have been underestimating the value of stashing cash in the box hidden at the back of your closet, now is the time to realize it. And it is also the time to get into the habit of saving!
