How to Create and Build an Emergency Savings Account
You never know how much you need emergency savings until you’re hit with expenses that don’t fit the budget. Whether it's medical bills, car repairs, a new appliance, or legal fees, the list of unexpected costs is endless, but doesn’t have to be a financial burden.
The best way to prepare for these and other surprise expenses is creating and building emergency savings.
Step One: Select a Preferred Savings Account
Before you start saving, you need an account where you can safely keep money.
Money Market Accounts allow you to earn higher interest as your balance grows. When the balance is $1,000 or higher, interest is compounded daily and paid monthly. Your balance grows, adding to any deposits you make to help you build up that emergency fund!
Step Two: Building Emergency Savings
How you fund emergency savings is your call; the key is to make deposits consistently until you reach your goal. Here are a few easy ways to build an emergency savings account.
Direct Deposit: If you receive direct deposit from your employer, have a percentage of each payment deposited in your emergency savings account.
Automatic Transfer: You can also schedule automatic transfers from one of your other accounts at the Credit Union to the emergency savings account.
Not Sure How Much You Should Start Saving?
Consider using the Pay Yourself First method to get on track.
How Can I Get Started With a “Paying Myself First” Budget?
While it’s not realistic to abandon your current expenses, especially if they’re your basic necessities, you can review your budget and see where savings can come from.
Spend a little less. Meal prep, walk a little more instead of driving everywhere, find clothes from second hand stores, or develop some hobbies that don’t involve spending a lot of money, like volunteering.
Set savings goals. Emergency funds don't have to be just for a "rainy day"--you can make it a goal to put new tires on your vehicle, or pay off an Are you planning to buy a house or upgrade to a newer car? Down payments are usually costs we easily forget and then feel surprised when we hear how much is needed upfront. Setting a savings goal for those eventual stepping stones in life can relieve stress for when the day comes to spend that money and it feels rewarding to hit those target goals in your savings account.
Don’t go for broke. Understand that saving is important, but keep funds available for unlisted expenses like gas money or one night out to dinner with the family. Even if you’re only able to dedicate a few dollars to your savings each paycheck, start with something small and gradually build your nest egg.
Get your Emergency Fund Started.
Emergency savings can be a necessity when big expenses hit. To get started on creating and building an emergency savings, open an account today. Questions? Call our Member Contact Center at 877-325-2848, or send us an email through our contact form.
How have you started your emergency savings account? Tell us in the comments!