Business View Magazine | November 2020

6 BUSINESS VIEW MAGAZINE NOVEMBER 2020 peace of mind someone can gain from knowing they won’t need to rely on debt is life-changing. If something comes up while the emergency fund is growing, emergency loans can provide a temporary solution if someone finds themselves without an emergency fund and in need of money. These short-term, often higher interest, loans serve to tide over the financial situation until more income comes in. If someone has been trying for months unsuccessfully to save, it may help them to try one of these unique strategies for people struggling to build an emergency fund:. • Automate It: This “set it and forget it” strategy is tried and true. The best part is there are now companies that exist to help make automating savings even easier! Apps like Digit will move small sums of money to a savings account throughout the month without the consumer even noticing. Many banks can now even round up purchases to the nearest dollar and slip those pennies right into a savings account. It may not seem like much, but small savings create significant change over time. • Keep It Small And Build: Starting with a lofty goal for emergency fund contributions can quickly cause someone to fail. It can be easier to start with a contribution of $1 or $5 a week instead. Once someone can recognize that it doesn’t hurt as much for those small sums to leave, they can incrementally bump the amount up by another dollar until they’re donating a more substantial sum. • Use Negative Consequences: Sometimes introducing a negative consequence can be more influential than a positive one. Let’s say someone wants to reward themselves after they’ve added to the emergency fund for three months in a row. In addition to the reward, like a cupcake from a favorite bakery, it can be useful to set up a negative consequence as well, like a donation to a charity or political candidate the person despises. The aversion of the thing someone doesn’t want to do or have happen can often be far stronger than the desire to get the cupcake or other positive reward. • Treat It Like a Bill: Make a formal commitment in writing to pay the “emergency fund bill” each month. People are far less likely to skimp out paying on something important if it has the weight of a utility bill or car payment. Calculate the fully- funded value and promise to make payments monthly until it’s done. Having money set aside to cover an unexpected car repair or medical bill is the difference between making a stress-free withdrawal from the emergency fund and needing to dive into credit. It’s a critical component of personal finance that can once and for all pull someone out of a paycheck-to-paycheck cycle. The peace of mind someone can gain from knowing they won’t need to rely on debt is life-changing