Budget Mistakes: Using Credit Card as an Emergency Fund
One great thing about credit cards is that you can use when your car breaks down on the highway and you need a tow and there’s not enough cash in your wallet or an ATM nearby.
If you have that cash in savings, you’d immediately pay your card and you’ll have no interest to pay. The problem is when you don’t have the savings and that emergency is growing on your credit card.
Start an Emergency Fund Quickly
A first goal is to save enough to cover monthly bills, then your next goal might be 2-3 months. Have a portion of your paycheck transferred to a high interest savings account.
Start small, like 5% of your income, and automate your money to transfer to high yields savings. You’ll be surprised how you won’t notice the little decrease in spending money. If you get comfortable, you can increase the amount.
Whenever you purchase groceries with a coupon, deposit your savings into the bank.
Tutor a young student in a subject you know.
Reuse any items you can rather than buying new, and pocket the difference in your emergency fund.
Shop around for a new insurance provider.
While paying attention to small, repetitive expenses, don’t ignore larger decisions like your car, house, and wedding. With smart choices on big-ticket items, you could fully fund an emergency account with the savings.
It doesn’t have to be difficult to save some money. You just have to be creative and motivated to make it happen.
Why We Use Capital One 360 for Our Emergency Fund
We’ve been with them for years and love it their checking and savings accounts. They have all the major features we’re looking for with a bank:
Covered by FDIC
No monthly maintenance fee
$0 required minimum balance
Free online BillPay service
Conveniently located ATMs
Earn some interest rate if possible
While they don’t have the highest rates, they’re still competitive and their customer service has been great for the few occasions we’ve had to use them.
Thoughts on Starting an Emergency Fund
Have you had to adjust and move away from credit cards to a proper emergency fund? How have you been able to work as a couple and build your emergency fund?
Build Wealth Together
Stop worrying about money and start dumping your debt and building wealth as couple!
Get our free guide on how to hack your goals. Make 2017 your best year ever!
Success! Now check your email to confirm your subscription.
Elle Martinez helps families at Couple Money achieve financial freedom by sharing tips for reducing debt, increase income, and building net worth. Learn how to live on one income and have fun with the second..