Sudden expenses, like major medical bills or expensive home repairs, can throw you off track, derailing your monthly budget or sidelining major goals. A little preparation, including dedicated savings, can go a long way.
Here are 5 tips to help you prepare for the unexpected.
Start a Rainy Day Fund
A rainy day fund (or an "emergency fund") can help you stay above water when unexpected events require a sum outside of your monthly budget.
There’s no universal formula or absolute goal for how much to set aside in a rainy day fund. But as a general rule, aim to save at least 3 months' worth of salary or 3 months’ worth of expenditure.
You don’t have to save this much overnight. The trick, like all savings goals, is to start saving small amounts regularly -- comfortable amounts you can manage every month, that can steadily build toward your goal (and start earning interest).
Bright can do this for you automatically. Once you’re connected, set your own savings goal. Bright will learn your spending habits and save the right amount every month, automatically.
Review non-essential spending
To help save more for emergencies, consider shifting some non-essential expenditures to your emergency fund. Take a look at your spending. Is there anything you could do without - temporarily, at least, while you build your emergency fund.
Short-term sacrifices can pay off later, when you’re ready for an emergency with enough in the bank.
Consider a personal loan
A low-interest personal loan can help pay unexpected bills. Before you take one on, make sure you can afford the monthly payments, in addition to your other ongoing debts. Also plan to pay back the loan as quickly as possible to avoid racking up interest charges.
Bright offers low-interest personal loans to all qualified users. You’ll find the option inside the Bright app.
Make extra money
If you’re already on a tight budget and are unable to cut more costs, look for temporary ways to earn money to help build your emergency fund.
Some ways to make some quick bucks:
- Sell an appliance or household items that you no longer need or can do without.
- Ask your boss if you can pick up some extra hours at your workplace.
- Find seasonal jobs to take on after your regular work hours.
- Pick up a part-time work-from-home job.
- Share your professional knowledge with others through mentoring, tutoring or consulting individuals or upcoming businesses that could benefit from your experience.
Check your insurance
Health, property and fire insurance are a few common safeguards against emergencies. Start with a quick review of your health insurance and make sure you can cover the deductible and copays. That’s a good place to start when planning your emergency fund. Consider shopping for policies with better premiums and pay offs.
Life is full of uncertainties. Make sure you prepare in ways that make sense for you.
Check your Bright Emergency Fund
With your Bright Plan, you can set up an emergency fund automatically.
Your Bright Plan always follows your goals, so you can set the fund at a level that makes sense for you. Your Bright Plan will move money to it when it fits with your spending habits, automatically.