The Right Way To Build An Emergency Fund

The Right Way To Build An Emergency Fund

An emergency fund is a cash reserve set aside expressly for unexpected bills or financial emergencies.?

Anyone who wishes to be prepared for the unexpected should have an emergency fund. An emergency fund can help you weather any storm, be it a job loss, a medical emergency, or a house repair.

But how do you go about putting together an emergency fund that would genuinely satisfy your needs?

Continue reading to find out how to create an emergency fund that works for any situation!

Start with small, regular contributions.

Starting little and making regular payments is the simplest strategy to develop an emergency fund. You can gradually expand your investment in this manner without placing too much burden on your finances.?

Therefore, contribute a fixed proportion of your monthly income and gradually increase this amount as your income grows. You can place it in a high-yield savings account such as Herconomy Vault where it will be easily accessible if you ever need it.

With a Herconomy Vault account, you can save daily, weekly, monthly, or at whatever frequency works for you, and enjoy 10% per annum returns on all your savings.?

Set several smaller savings goals, rather than one large one.?

Many people save for an emergency fund by putting money aside regularly. However, if you have other financial goals, this can be tough to stick to. Instead, set multiple smaller savings goals.?

For example, every month, you might save NGN10,000 for medical bills, NGN15,000 for car repairs, and NGN20,000 for home repairs. Over time, this will allow you to grow your emergency savings and pay easily for unforeseen expenses.

Automate your savings.?

Automating your savings is one of the best strategies to ensure you have enough money saved in case of an emergency. This entails setting up a regular transfer from your checking account to your savings account so that you save a specific amount of money each month automatically.?

This strategy can assist you in prioritizing emergency savings, and you will be less likely to squander the money if it is out of sight and out of mind.?

Another advantage of automating your savings is that it allows you to track your progress and verify that you are on track to meet your target.

Look for an account that pays you back?

When looking for the best account to keep your emergency cash, there are a few items to consider:

• Look for a savings account with a high-interest rate so you may profit from your savings.?
• You should also look for an account that does not charge any fees.
• Finally, make sure that the account is conveniently accessible in case you need to spend the money quickly.

Don't over-save.

Over-saving is one of the most common mistakes people make while putting together an emergency fund. They save too much money each month, making it harder to cover unforeseen needs. It's critical to strike a balance between saving enough to meet unforeseen expenses and having enough money left over for other financial goals.

Start with a tiny emergency fund to help you discover this balance. Begin with NGN500 to NGN10,000 in savings, which should help cover minor emergencies. Once you have this cushion, you can begin working on increasing your savings to handle larger expenses.

Conclusion

Starting small and gradually increasing your savings over time is the greatest method to develop an emergency fund. You should also maintain your emergency savings in a secure and conveniently accessible location.?

Herconomy is an excellent place to begin saving for an emergency. You can check your progress and ensure that your funds are continually growing using our simple online platform.

Download the app today AND start saving.