(InvestigateTV) — When an unexpected expense pops up, many of us have to scramble to cover the cost – but having an emergency fund can stop the panic and cover the cost.
The easiest way to start an emergency fund is the “set it and forget it” approach. Set up a direct deposit to a separate savings account, by having employers split paychecks or by scheduling automatic transfers from checking to savings accounts once or twice a month.
Cherry Dale, the vice president of financial education at Virginia Credit Union, said people who automate their savings are much more likely to achieve their financial goals – whether it’s building up an emergency fund or even creating a vacation fund.
“You can create different savings accounts for your different financial goals to where when you’re getting paid that money automatically goes into those accounts,” Dale shared.
Dale said you can also automate paying bills.
“But you can also have an account specifically for your bills,” she said. “So, your bills are automated, your mortgage is getting paid or your rent, your car payment, your insurance, all of those things that you know you consistently have to pay each month. You put in that sum and that’s automatically taken care of, so your payments are taken care of, your expenses, but your savings are as well.”
Dale said people could also use different banking institutions to do this. So, every account is not connected – sort of an “out of sight, out of mind” approach – to resist the temptation of spending saved money.
She said automating savings and bill paying makes life easier and keeps people from forgetting a payment.
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