You can plan out all your monthly expenses, keep a close eye on your budget, and track your spending, but no matter how careful you are with your money, life always manages to throw some unexpected expenses your way. If you want to be prepared for when these inevitably come, it helps to have an emergency fund at the ready. Many experts say you should have at least three months worth of living expenses set aside, and if you’re supporting a family, it’s better to have closer to six months worth of living expenses saved.
While there are a few ways to cut back on your monthly expenses and help you boost your income, that doesn’t mean that every area of your budget needs pruning. In fact, there are some areas that you need to be careful about cutting back on to try to save more money, because it could end up costing you more down the line.
To help you focus your saving efforts on the right areas and avoid skimping on important parts of your budget, here are four things you shouldn’t cut back on in order to build up your emergency fund.
There’s a lot that goes into owning a car, from the cost to buy it in the first place, to insurance, maintenance, and gas. While you might be tempted to do everything in your power to cut back on some of these expenses, there are certain areas where you’ll need to be careful. This doesn’t mean that you need to buy the most expensive car on the market, it just means that you need to prioritize reliability and safety instead of buying the cheapest thing on four wheels you can find.
Buying a very inexpensive car might save you some money at first, but there’s often a reason it’s so cheap in the first place. You might be picking something up that you’re going to need to sink a bunch of money into right away, or at least in the near future.
You might be tempted to go a similar route when you’re looking for car insurance. While it’s important to carefully review all of your options to try to find the best deal, you may end up with a policy that only covers the minimum requirements in your state, and that’s not necessarily ideal. It’s likely that this coverage won’t be enough to handle the cost of a significant accident, and it’ll end up costing you much more than the additional dollars on your premium. If you do end up needing it at some point, you’ll have saved money if you didn’t skimp on your coverage in the first place.
Lastly, it’s important that you don’t fall behind on your regular car maintenance. If you’re skipping out on basic car maintenance just so you can throw an extra $50 in your emergency fund, this choice may end up costing you down the line.
If you do end up having to deal with an unexpected car repair in the future and don’t have enough money in your emergency fund to cover it, you might want to consider a personal installment loan with MoneyKey. An installment loan can help you deal with an unexpected repair that can’t wait and tide you over until you get your next paycheck.
Just like owning a car, being a homeowner is a pricey endeavor. This is likely going to be your biggest financial asset, so you’re going to want to make sure you treat it with care. Otherwise, you’ll risk letting the small fixes turn into larger, pricier issues to deal with if you ignore them in the first place.
For example, you may not think of cleaning your gutters as a particularly important task, but letting your gutters clog can lead to much more expensive problems, like:
Ignoring something that’s relatively easy to handle like clogged gutters can lead to a much more expensive problem down the road.
As much as you may be trying to put every extra dollar towards your emergency fund, it’s important to remember that you have other bills and debt to pay off, and the longer you let some of this debt linger, the more you’ll end up paying later on. While you do have the option of just keeping up with your minimum payment on your credit cards, it’s good to pay off as much of your debt off as you can, even if this means it’ll take a little longer to bulk up your emergency fund.
While it’s good to build your savings, if you have to ignore your credit card debt to do it, the debt that’s accruing might end up costing you more than you’re able to save. This is why it’s important to pay off your debt to avoid letting interest payments build up.
Another area of your life that you may want not want to skimp on when trying to build your emergency fund is your diet. While you might be tempted to cheap out on food full of preservatives just to save some money on groceries, maintaining a healthy diet is something you shouldn’t give up just to save more. While you’ll want to keep up good eating habits to feel your best throughout the day, eating poorly may also hurt your wallet in the long run if you end up running into health issues that could’ve been avoided with a healthy diet.
But this doesn’t mean you have to break the bank to eat well. In fact, if you know what food to be looking out for, how to get the most out of your shopping trips, and how to meal plan on a budget, you may actually be able to save more on your groceries while maintain a healthy diet. Some things you can do to help this process include:
When you take control of your meals and know exactly what’s going into them, you may be able to cut back on your food bill and still maintain a healthy diet.
If you want to be financially prepared to tackle unexpected expenses and emergency bills, building up an emergency fund to have at the ready is a smart move. But it’s important to remember that there are certain aspects of your life that you shouldn’t be skimping on just to save a few extra bucks. Cutting back on the things we’ve listed could just end up costing you more money down the line.
It’s also important to remember that if you do run into an unexpected expense you can’t cover with your emergency fund, there are other options out there to help you tackle these bills. For example, an online loan with MoneyKey may be able to provide you with a financial stopgap if you run into an emergency home repair or an unexpected medical expense that you can’t afford.
Either way, the key is to be smart about your saving and understand what you should and shouldn’t be cutting back on. This way, you can start to build up your emergency fund in the healthiest way possible.
Do you have any tips to help build an emergency fund? Share below!