Whether in school or already out, you need an emergency fund to help you cover unexpected expenses. With it, you can avoid debt when unplanned bills pop up.
The key is to start saving now and build your emergency fund up over time. Here are some things to consider to get you started.
Set a Goal
Students need an emergency fund to help them handle unexpected expenses that may derail their progress toward graduation. It’s also an excellent way to develop financial habits for life after college.
The money you need for an emergency fund can vary depending on your circumstances, but most financial experts recommend accumulating three to six months’ worth of spending.
You can start building up an emergency fund for a student by taking out a small monthly amount or setting up automatic transfers from your paycheck to a savings account. If you save consistently, you will eventually meet your goal of having an emergency fund.
Keeping your emergency fund separate from your checking and other savings accounts is crucial to its success, as you want to avoid dipping into it for non-emergency costs. You can do this by opening a separate bank or credit union account or getting a prepaid card.
Make Savings a Habit
We all face unexpected expenses, whether an expensive car repair or a broken laptop. An emergency fund for these emergencies can help you cover costs and get back on your feet faster.
Ideally, you want an emergency fund that covers three to six months of your expenses. But if that’s unrealistic, start with small goals to build a savings cushion.
The key is to save consistently, even if it’s just $5 a week or a dollar a day. That way, the money adds up quickly, and you can enjoy the sense of accomplishment that comes with putting away savings.
It’s also important to make saving a habit, so set up automatic contributions into a dedicated account that you don’t use for other purposes. It will reinforce the idea that saving is a worthwhile investment and help you stay on track to reach your long-term goals.
Get a Job
If you’re a student struggling to get by, there is still time to build an emergency fund. There are several options, including getting a job.
Getting a job isn’t just about earning money: it’s also about gaining skills and experience that you can use to land a full-time job after college. You’ll be prepared for any job changes or career challenges.
One of the ways to do this is to work part-time, especially if you are in school. There are plenty of opportunities around campus, from working at the bookstore or cafeteria to being a tour guide.
Get a Credit Card
If you don’t have enough money in your savings account to cover emergencies, getting a credit card can help. But make sure you use it responsibly and pay it off in full each month. A credit card can help your credit score if you pay your bill on time.
You have to be 18 or older and have a job or other source of income to get yourself a credit card. You also need a credit history, which can be challenging for students. Luckily, you can get emergency loans online, which can help you get out of sticky situations.
If you don’t have a credit history, the best way to build one is to become an authorized user on a parent or guardian’s credit card. It will allow you to piggyback on their credit history and increase your chances of being approved for a student credit card.