Everyday habits can waste money that could be put to a better cause, like building an emergency fund that you can depend on. Find out what regular habits you should break for the sake of savings and how you can use those savings to create a financial safety net.
The Daily Coffee Habit:
While indulging in a daily cup of coffee may seem harmless, the costs of this habit can quickly add up. Instead of buying coffee every day from a café, consider brewing your own at home and grabbing the coffee available at your office. If you can’t stomach the coffee that’s available at your office, then you should be able to brew a cup there for yourself. Bring a French Press or a portable coffee filter cone, along with a bag of coffee grounds, with you to work. That way, you can make yourself a delicious cup of coffee whenever you’re on break.
By making this small change, you can save significant amounts each month, which can then be directed toward your emergency fund.
Smoking cigarettes isn’t exactly a cheap habit. If you smoke a pack of cigarettes per day, and the pack costs $6, you’ll be spending over $2000 on the habit by the end of the year. Adding $2000 into an emergency fund could be much more useful. Having that amount in a savings account could help you tackle a long list of urgent expenses, from plumbing bills to appliance repairs.
So, you should think about quitting smoking for good. Talk to your doctor before starting this journey.
Buying Lottery Tickets:
Buying lottery tickets can be an enticing habit. Every time that you buy a ticket, you imagine how you’ll become a multi-millionaire. You daydream about the luxuries you’ll use your winnings to buy, all until you check the ticket and find out that you weren’t so lucky.
The truth is, there is not a very high chance of winning the lottery. The odds of winning a $1 million prize in Powerball is 1 in 11,688,054. The odds of winning the Powerball jackpot is 1 in 292,201,388. You’re not likely to get the lucky draw, even if you buy a ticket every single week.
It’ll be much savvier to put the money that you would normally spend on lottery tickets into your emergency fund.
Paying Your Bills Late:
Do you have a bad habit of paying your bills late? Then, you likely have a bad habit of collecting late fees. You can save yourself from having to pay late fees every single month by setting up automated bill payments. Do this through your online bank account or mobile banking app. With automated bill payments, your providers will get paid exactly on the due date every single month. And you can have more money in your pocket.
How to Build an Emergency Fund
Start by opening a separate savings account. A savings account is the perfect place to store an emergency fund. Savings accounts are easily accessible. You will be able to make transfers or withdrawals from the account at a moment’s notice. Your savings account will also come with an interest rate that can help the balance grow over time. For faster growth, choose a high-yield savings account — this will have an annual percentage yield between 2-4%.
Then, go over your personal budget to see how much you can afford to contribute to your emergency fund every month. After breaking your bad habits, you should have plenty of savings to add to it. Include this new category in your budget and then move the savings into the fund. Repeat this step every single month. Over time, these small contributions will add up to an excellent safety net.
When your fund is still new, it won’t be very dependable. It might not have enough money to cover an urgent expense. If you have the bad luck of getting hit with an urgent expense before your fund has had a chance to develop, you’ll have to consider a different payment method. You could use a credit card, or you could try to apply for a cash loan online for help. As long as you meet the qualifications for the online loan, you can fill out and submit your application in a short amount of time. It could take you less than 15 minutes to do. You just might get approved. Then you can use the borrowed funds to pay the emergency expense off and recover.
Stop letting those bad habits empty your wallet. Quit them and move those savings into an emergency fund. That safety net will be well worth your sacrifices.