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Starting an emergency fund on a small income

Begin with one small buffer and grow it with money you will not miss.

16 items · 4 sections · money, personal-finance, budget, savings

Start this checklist

Set a first target (4)

  • Pick a first goal you can reach in 2 to 3 months, such as one week of basic costs
  • Add up a month of must-pay bills: rent, food, transport, phone, loan payments
  • Write the long-term goal: 3 to 6 months of those bills
  • Name it in your bank app so you do not spend it

Find the money (4)

  • List your subscriptions and cancel at least one
  • Save the small things: a no-spend day, loose change, a lower plan on your phone
  • Put any one-off money here: refunds, a bonus, a tax refund, a gift
  • Sell one thing you no longer use

Make it automatic (4)

  • Open a separate savings account, not linked to your card
  • Set an automatic transfer for the day after payday
  • Start with an amount that feels almost too smallA small amount you keep doing beats a big one you stop.
  • Raise it a little whenever your pay goes up

Use it the right way (4)

  • Only for real emergencies: a job loss, a medical bill, an urgent repair
  • Ask: is it needed, is it urgent, is it unexpected? Three yes answers mean use it
  • Refill it first when you do use it
  • Do not count the fund against a credit card limit

Written from www.consumerfinance.gov

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