The recent government shutdown has put many federal employees under incredible financial strain. Regardless of how well you plan, life can be unpredictable; that’s why it’s important to have an emergency fund in place to help you weather unexpected events. Saving for emergencies may seem challenging, so here are some basic tips to help you get started right now.
Start With A Smaller Goal
Saving for retirement should begin the day you start working, so contributing funds to your TSP is a top priority. However, if you don’t have an emergency fund, you might find yourself dipping into your TSP to cover costs. That could impact your nest egg and delay your retirement. You might also consider lowering your contributions to stash cash, but before you do, consider this: all you have to do to save $150 per month is cut your spending by $5 per day. That’s doable, right?
Choose A Bank That Offers A Sign-Up Bonus
There are several banks that offer cash bonuses for new customers. You can use the additional cash to jump-start your emergency fund. Also, consider setting up a savings account with an online bank that may offer a better interest rate than a brick-and-mortar bank. And don’t forget to keep it simple by setting up automatic, direct deposits.
Save Unexpected Cash Windfalls For Emergencies
From cash birthday gifts and inheritances to larger-than-expected tax refunds, make an effort to save a portion of any windfall for future emergencies. And, when you get a pay raise, give your emergency fund a raise, too. Emergency savings can prevent you from withdrawing from your TSP or, worse, using a high-interest credit card to cover an unexpected expense. You’ll thank yourself for thinking ahead when life throws you a financial curveball in retirement.
Cut Your Non-Essential Spending To Save More
Take a long, hard look at non-essential spending habits that you can easily cut. Review your recent credit card and checking account statements to see if you’re paying for apps or services you rarely use. You may even find you were automatically signed up to pay for a streaming service after the free trial expired. Once you make these spending cuts, you can divert the extra money to your emergency fund.
Only Use The Fund For True Emergencies
Your emergency fund should only be used for unexpected expenses like costly home and car repairs, not a family vacation in an exotic locale. When you do need to withdraw money for a true emergency, make sure to replenish your account balance ASAP.
For more information on crafting a financial plan that can help you weather all of life’s ups and downs, reach out to a Federal Retirement Consultant (FRC®) who understands your unique federal benefits.
