Tips For Building an Emergency Fund
You can't predict when a financial emergency will hit. That's why it pays to prepare by socking away some money in a savings account as an emergency fund. But if you don't have a lot of cash lying around, where can you find the extra savings?
There are probably a few ways you could trim your budget each month. So put your paycheck to better use and give the tips below a try. Your emergency fund will thank you.
The amount of money you spend on dining out will probably shock you. Put that money to better use in an emergency fund.
Freeze your gym membership: When was the last time you hit the gym? If it's been a while, that monthly membership is eating into your savings for no good reason. More than five million American adults1 with gym memberships don't use them, wasting a combined $1.8 billion per year. But don't worry, you don't have to cancel. Many gyms allow you to freeze your membership temporarily so it's there for you when you're ready to get back in shape.
Eat out less: We're not here to tell you that you can't enjoy a latte from the drive-thru or a burrito to-go every once in a while. But have you ever stopped to add up just how much you're spending on take-out? The average American eats out 5.9 times a week,2 which really adds up. In Alabama, for example, the average person spends $2,069 per year dining out, while the average Floridian spends $3,253. Take some of that money you would've spent and put it in a savings account.
Redeem your credit card points: Do you have credit card rewards miles or points sitting around in your account doing nothing? Consider redeeming them for cash back and putting that money into your savings — or apply the money to your credit card bill for the month to help get you out of debt.
Refinance your debt: If you have credit card debt or a home mortgage, it pays to keep up with financial news. When the Fed lowers interest rates, the prime rate, which is the lowest interest rate that banks offer their most qualified customers, also falls. When the prime rate is low, it may be a good time to consider consolidating outstanding credit card debt into a bank loan and locking into a much lower interest rate.
While mortgage interest rates aren't tied directly to the prime rate, they are based on some of the same factors the Feds use when setting interest rates. So when the Feds lower rates, it's a great time to see how much you may be able to save by refinancing your mortgage.
Switch banks: These days, checking accounts that don't charge a monthly maintenance fee are few and far between. But free checking accounts do still exist. So if you're wasting money on bank fees every month, consider switching to a new bank with a free checking account.
Transfer your balance: If you carry a credit card balance month-to-month, that interest you accrue makes it tough to pay it down and focus on saving money instead. However, if you find a balance transfer offer, you may qualify to move your balance to a new card and pay 0% APR for anywhere from six to 18 months. Take the interest savings and put it into your savings account, or get rid of your debt faster so you can focus 100% on saving money when your debt is paid off.
Join a "Buy Nothing" group on Facebook: One person's trash is another person's treasure. And in a Buy Nothing group,3 you may find that your neighbor's unwanted “trash" is actually just what you've been looking for. The next time you need something, find out if someone in your community has it available for free before you go out and buy it brand new. And then add the money you would've spent to your saving account.
Are you ready to start saving for a rainy day? Make an appointment with your local Synovus branch to learn how to open a savings account.
Important disclosure information
This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.
- “Americans spending $1.8 billion on unused gym memberships annually," Finder.com, https://www.finder.com/unused-gym-memberships, Updated April 1, 2019, Accessed April 1, 2020. Back
- Frank Olito, “Here's what the average person spends on dining out in every state," Business Insider, https://www.businessinsider.com/what-people-spend-on-dining-out-2019-8, Published August 12, 2019, Accessed April 1, 2020. Back
- Casey Bond, “'Buy Nothing' Groups: Stop Spending Money And Just Ask For What You Need," HuffPost, https://www.huffpost.com/entry/buy-nothing-groups_l_5e56b6b7c5b62e9dc7dbc2c9, Published February 28, 2020, Accessed April 1, 2020. Back
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