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Having an emergency fund in your savings account is one of the building blocks needed to achieve financial security. Despite the importance of an emergency fund, it’s common for people to live paycheck to paycheck. This doesn’t have to be the case. Creating a financial cushion takes time, but getting started is simple.

How to Build Your Emergency Savings 

1. Calculate How Much You Want to Save

How much do you want to save? Having three to six months of your living expenses in a savings account allows you to meet your basic needs if circumstances change, such as a job loss or illness. While the amount you come up might feel like an unreachable goal, especially if you’re new to saving, remember that every little bit counts. Start small and build from there. 

2. Set a Budget

No one likes to talk about budgets because it can feel like denying yourself minor expenses, but learning to develop one is a crucial life skill. Budgeting allows you the freedom to make sound financial decisions based on your income and expenses—there’s nothing scary or unpleasant about it.  

savings accountTo you set your budget, determine how much you need to spend each month and how much you have left over to go towards your emergency savings goals.  If you find that you don’t have enough money to put toward savings, you have two choices: cut back on expenses or increase your income. 

3. Pay Yourself First

One of the significant pitfalls those who fail to save money successfully is that they wait to pay themselves after completing their spending for the month. Instead of contributing to your savings account last, do it first. You can do this by making automatic transfers to the account at the end of each month or after receiving a paycheck.

4. Assess & Adjust

It’s not enough to set a savings plan and let it run until you reach your goal. To truly be effective in building your emergency fund, you want to have regular money meetings with yourself. Every 90 days, review your budget and how much you’ve contributed towards your savings goal. Look at ways to increase savings to reach this goal faster. If you’re on track, rest assured that you’re making positive choices for your financial future.

 

You can reach your emergency savings goals as long as you have a plan and the support you need. First Bank and Trust has the tools you need to reach your emergency fund savings goals. They’ve been serving Greenup County, KY, since 1932 and are still going strong. With additional locations in Ashland, Flatwoods, Greenup, Russell, and South Shore, they have a branch near you. Visit them online for information about their banking services, or call (606) 836-0211 to set up a savings account.

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