An empty emergency fund isn’t very useful in times of crisis. Your emergency fund should have a substantial amount of savings inside so that you can quickly recover from a surprise expense.
With an empty fund, you won’t have enough to manage a surprise expense at all. You could turn to a credit tool like a credit card or line of credit loan. If you don’t have a line of credit already, you could try to apply for a loan through CreditFresh
How Can You Make Your Savings Grow?
Use a High Yield Savings Account
A high-yield savings account is an excellent place to store your emergency savings because it comes with a higher interest rate than a standard savings account. Your savings will automatically accrue interest over the course of the year, giving your savings a small boost without any action on your part.
But there is a catch. Since this type of savings account comes with high rewards, applicants have to meet certain requirements before getting approved for one. One common requirement is a minimum balance. If the contents of your savings account drop below that minimum, you will be charged a fee. The account’s interest rate may also become void until you cross that minimum once again. So, your emergency savings might not grow until you resolve the issue.
If you’re confident you can meet the requirements for this account, you should get one and store your emergency fund inside.
Automate Your Contributions
Your emergency fund won’t grow very quickly when you’re inconsistent with your contributions. You need to commit to contributing every single month.
To guarantee that you don’t forget a contribution, you should set up an automatic transfer between your checking account and the savings account where you’re storing your emergency fund. Make the transfer recurring, so it’ll deposit funds into the savings account once a month.
Think of your emergency fund like another monthly bill. You can’t ignore it — you have to pay it by the set deadline.
Add in Windfalls
A windfall is a large — sometimes unexpected — financial gain. A windfall can come in the form of an inheritance from a family member that passed away. It could be a tax refund or stimulus check from the IRS. It could be a large bonus from your workplace after completing a successful project. It could be prize winnings from a lucky lottery ticket.
Whenever you receive a windfall, put a portion of it into your emergency fund. Doing this will give your fund a quick boost and get you much closer to your ultimate savings goal.
Making frequent, unnecessary withdrawals from the fund will undermine your ultimate savings goal and leave you with a smaller safety net to rely on when you really need one. You should only make withdrawals for emergency expenses.
If you need funds to pay for a non-emergency, like a weekend vacation, you should use a different savings fund. And if you don’t have another savings fund, you should look into ways to cut variable expenses in your budget so that you can save up for this particular goal. Whatever you do, don’t sabotage your emergency fund.
Use these tips to grow your emergency savings and to do it fast.