Building an emergency cushion is a severe challenge for almost everyone. Those living paycheques to paycheque do not bother about setting by money, and those who can are unable to have enough money stashed away.
Although Google is flooding with various tips, people still find it hard to have a sufficient cash reservoir. According to a survey, more than 50% of people cannot salt away money and have hung blame on the living cost crisis.
The same survey suggests that there has been an increase in the number of people who had been saving, thanks to the pandemic, but a rigorous cost-cutting approach resulted in this.
Building an emergency cushion is imperative regardless of your total monthly earnings. Even a little amount of money can help tide you over when unforeseen expenses. They do not spare even if you are living paycheque to paycheque, so it cannot be an excuse for being unable to create an emergency cushion.
Saving tips for creating an emergency corpus rapidly.
If you want to stow away money for a rainy day, you should follow the following tips. These saving hacks can help you achieve your saving goals quickly.
- Settle your debts
If you have debts to pay off, you will find it hard to juggle between repayments and saving, especially if you have made a default on your loans. For instance, if you have taken on personal loans in Ireland, interest will keep accruing on the outstanding balance until you clear it.
Interest can eat into your budget, so try to free yourself from the reign of debts. Once you have settled your debt obligations, you can spend your money on yourself. It will be much easier to lay aside money for your unforeseen expenses.
- Find out how much you can lay by
Choosing a random amount like 10% or 20% of your monthly income does not work at all. First off, you must know your total expenses. Grab your statement and then determine the average spending.
Subtract it from your monthly income to see if you are left with some money. Whether yes or no, you should whittle down your expenses. Discretionary expenses always have the scope for cutting down. Do it so more money you can throw at your emergency corpus.
- Track spending
Keep an eye on your expenses so you know you are not going beyond your limits. You can use either a manual spreadsheet or a budgeting app. This will help make you aware of how much money you are spending.
It is suggested to keep tabs on your expenses so you do not end up taking on fast loans in Ireland to meet your regular expenses.
- Cancel subscriptions
You may not find them necessary, but paying every month €5 or €10 can add up over time. For instance, a cable subscription is simply a waste of money when you watch streaming videos. Likewise, it is not worth subscribing to paper or digital magazines when you do not read them.
Cut newspaper supply as you can hear news on TV or read online. Make a list of all subscription channels, and then see which one you use.
- Make a grocery list
Have a list in your hand before you step into the grocery store, so you buy only those items that you need. Shopping without a list will prompt you to stockpile. Look for items on sale to save pennies.
Things that do not go off soon, like toiletry products, can be bought in large quantities if it helps save money.
- Automate your savings
Once you have identified how much you can save, you should link your savings account to your payment account and automate the transfer of funds, freeing yourself from keeping it aside manually.
Another benefit is that you can keep yourself from dipping into those funds for your regular expenses.
- Rely on a home-cooked meal
It is far cheaper than restaurant food. There is no problem at all if you are buying it once a while, but food bills can add up to hundreds or thousands of Euros if you are at least ordering one time meal from the restaurant.
You can avoid paying hefty delivery fees if you take lunch to your office. Suppose you do not get time to cook a meal every day. Take advantage of weekends. Finish cutting and chopping during weekends, so only the cooking task is left. You can also cook some dishes at weekends and refrigerate them, so they do not go off.
- Pay in cash
You must be wondering how t can help save money, but it can. By using cash for all of your transactions, you will have a clear idea of how much you have now to meet other expenses. You can fine-tune your budget if you see you are in a tight spot.
Most people get into a mire of debt because they use credit cards. Since the bill is not generated immediately, you do not realise that you are overspending. This results in robbing Peter to pay Paul. You can avoid this kind of predicament by taking full responsibility for the transactions you make.
The bottom line
You can build an emergency cushion quickly with the help of the saving hacks mentioned above. Other hacks include reducing your utility bills, learning DIY skills, using public transport instead of a vehicle, and the like.