Establishing an Emergency Fund

Britney Balderas | Posted on July 26, 2016 |

Your money is important to you. With more and more Americans struggling to make ends meet, it’s becoming more clear how important it is to have an emergency fund established. The total average household debt is about $130,000 between credit card debt, mortgages, auto loans, and/or student loans. Add to that the temptation to try to keep up with the Joneses while living paycheck to paycheck, and the result is financial disaster. It’s been said that only 38% of Americans could cover an unexpected emergency such as a trip to the ER, emergency plumbing visit, or even a car repair. The good news? That doesn’t have to be you. Let’s take a look at a few easy steps to establish a fund that will protect and prepare you and your family in case of an emergency.

Step 1: Start with a Small Goal

Don’t be overwhelmed by the idea of setting a huge lump sum as your goal for your emergency fund. Start small with a reasonable goal, like $250 or $500. It is small enough that you could possibly reach it in a few months or weeks depending on your current financial situation. It may sound small now, but in the event of an emergency, that $500 can make a huge difference. Break down that small goal into even smaller goals, like $25 a week or $40 a week or month. Whatever your number is, after a couple months, you’ll be able to reach your goal! You can also use our savings calculator to help you determine your most effective strategy to build this emergency fund. If you’re feeling like even $25 is too much to go without each week, here are a couple of ways to cut costs:

Write down all of your monthly expenses. You might realize just how much money is being wasted without even realizing it.
Make a budget and stick to it.
Transfer your big bank credit card over to Eastex Credit Union. We offer lower rates with no hidden fees.
Take the time to make a real grocery list instead of trying to keep it all in your head.
Carpool
Cook your meals at home and bring them to work
Use public transportation
Cut the cable
Make coffee at home instead of stopping at your coffee shop every morning; you’d be surprised how much this adds up!

Step 2: Make it an Automatic Transaction

Be intentional with your savings plan by opening a savings account with Eastex Credit Union. We offer many different types of savings accounts that are designed with your greater goals in mind. We can automatically set up withdrawals to go directly into your savings account so you don’t even have to think about it! And, remember – it’s for emergencies only, so don’t dip into it unless you absolutely have to!

Step 3: Don’t Get Discouraged

Making a lifestyle change isn’t easy, and it may be hard to stay determined. Remember to set small milestones along the way so you don’t get overwhelmed. It will feel good to reach those small goals, and eventually your money will start working for you as it grows! When you complete a small goal, set another goal. Keep the automatic savings in place and set a higher amount for your emergency fund. Once you hit that, aim for an even larger goal like living expenses, a trip, a big ticket item, or whatever it is you want. Keep accumulating money and over time you’ll begin to see the results. By following these easy steps, you’ll be much better prepared should an emergency occur. You’ll have a savings account to turn to instead of a credit card. Keep following the plan and before long, these emergency expenses won’t disrupt your life the way they used to. Contact Eastex Credit Union today to get your savings account set up!