Setting aside a fund for emergency is a part of stable financial planning. You can never predict what future has in store for you or if at the next moment, you will have to face curveballs. It could affect your financial situation and that is why, having a rainy fund makes sense.
You will enjoy peace of mind after your contingency fund snowballs to a good fortune. A part of our saving is meant to deal with unexpected problems that we never want to happen to us. What will you do if you face unpleasant problems that require use of emergency fund?
There are several incidents where people are forced to use emergency fund entirely and they discover themselves standing at where they started. It is time to rebuild emergency fund but that will take years. However, a long road ahead must not dampen your spirit of rebuilding emergency fund as it is must for you to do that.
Here are some simple tips to follow:
Be determined not to spend unnecessarily
The first thing to start with is to develop a willpower so that you can say a firm ‘NO’ to the habit of indiscriminate spending. With no emergency fund to dip into during financial crisis, it is better to be frugal in order to mount up saving as much as you can.
Spend your earning only on the most necessary items until your emergency fund grows back into a healthy amount. To sum it up, you should develop a new financial planning that will allow you to set aside a great deal of money for emergency purpose. Mark the areas where cost-cutting is still a great possibility. Trim spending and it will add to your saving.
Increase your income
Getting your emergency fund back into its previous condition is not something you will be able to do within a few days or months. It will take you years to replenish the fund. However, your goals should be how to rebuild it as early as possible. Unfortunately, fulfilling the objective on your regular income will be hard and time-consuming.
With time being never a luxury, you should explore other options of earning to inflate your current income. I started freelancing apart from working in a company. You can choose what pertains to your passion, skill and experience. Or you could take the advice of Rick Kimball, founder and CEO of HExL, Inc. to learn how to reframe your skill set by “finding the common passion that you share with others and having this shared purpose connects people at a deep emotional level and is a precursor to creating flow in your life.”
Make the wrongs right
You already have experience of building an emergency fund. That means you are aware of how to start and how to avoid the odds to achieve your goal. With experience on your side, it will be easier for you to build up fund from the scratch once again. Failures and mistakes give you the most useful lessons in your life. What went wrong? Once you identify the mistakes, it will be easier for you to avoid them while you are working on fund rebuilding. This time, even if those odds pop up, you will be able to deal with them differently.
While rebuilding your emergency fund, it is extremely important to decide how much you want to save and how you can achieve your goals. If you take the right decision, it will help you save a bigger fund than what you saved last time.
Do you have any other idea to rebuild fund for emergency? Feel free to share in the comments.