Financial advisors often recommend that everyone should have at least three to six months’ worth of savings in the bank in the event that a job loss were to take place or some other major unexpected event that could lead to loss of income. For some people this is possible but for others it is not so easy to do. In fact for many families it is a downright impossible standard to realize.
If your income does not offer a lot of flexibility to save three to six months’ worth of your salary then you should aim to have at least few hundred bucks in the bank to start. Having $1000 in the bank can provide a financial cushion that can soften a number of financial blows and woes that you could face. It can cover many minor emergencies that you might have to use your credit card for otherwise, it can help to provide an overdraft for your bank account and it means that you will not have to use payday loan companies when you are short a few bucks.
Saving $1000 in your account is doable, even for those living paycheck to paycheck if the discipline and the commitment are there. If you are earning enough to have a large emergency fund then that is wonderful, the more the better, but for everyone else starting with just $1000 can provide you with enough of a financial pad to give you a running start.
By trimming the money you spend you may be able to save $1000 faster than you might think. Starting to save is often the most difficult step. Once you start to see the money accumulating in your account it will get easier to save more and more because you will see what you are accomplishing and you will come to realize that you are building a future with more financial freedom. The more you save the more power you give yourself and this should make you feel very good! By altering the way you view money and spending you can improve the quality of your life.
Building an emergency fund with $1000 in your bank account is something that practically everyone can manage to scrape together with some honest to goodness effort and enough determination. Once you have done it you will realize how much it can impact your life and indeed change it for the better.
Steps to Help You with that $1000 Cushion
There are different ways that you can build a cushion of $1000. Here are three steps that can make it so much easier to do:
- Instead of saving $1000 and placing it directly into your savings account and then only having enough in your checking account to pay your bills begin by keeping an extra $100 in your checking account at all times. In other words, after all of your bills are paid that $100 should still remain in your account. If you can stop yourself from withdrawing this amount and spending it then you will always have extra in your account for the checks you write. It would help to apply for overdraft protection at your bank as well. This minimizes the damage if you do happen to write a check that exceeds you balance.
- Take $1000 all at once or save it over time and place it into your savings account. It may not seem like much money but it will be most useful for everything from getting your car fixed to replacing a broken appliance to paying for an unexpected expense. Even if the cost of the emergency is greater than $1000 the money will still go a long way in helping you pay for it.
- Now comes the really hard part- leaving your money alone! Keep your money in your account at all times unless a real emergency comes along. Needing a new outfit for a social occasion is not an emergency nor is wanting to go to the beach for a weekend getaway! When you have money in your account that can help you with emergency situations then you will not look for fast fixes to obtain cash, such as your credit cards or loans from payday lending companies.