Have you been binging on movies, T.V. shows and snacks more than usual? Us too. But while you’re hanging out on the couch indulging in your DoorDash delivery and catching up on the latest Netflix, you might as well do something good for your finances. Believe it or not, snacking and watching movies could actually help you build an emergency fund.
What is an emergency fund and why do you need one? Essentially, an emergency fund is a stash of money set aside to cover emergencies from job loss and medical emergencies, to car repairs or a leaky water heater. Although factors such as your family size, current debts, and job stability will dictate the size your emergency fund should be, most experts recommend saving three to six months’ worth of expenses.
With an emergency fund, you can prepare for the financial surprises life may throw your way and give yourself some much needed peace of mind. Here’s how you can create an emergency fund during the coronavirus era and beyond.
Use round-up savings apps
A relatively new financial tool, round-up savings apps were designed to make it easier and more enjoyable for people to save money. They connect to your bank and credit card accounts and monitor your transactions. Whenever you make a purchase, round-up apps will calculate what would happen if you had paid with cash, then take the change left over and move it automatically to a designated “goal” account.
So how does this work from your couch? If you order a pizza with your credit card for $9.50, the app would round up to $10.00 and transfer 50 cents from your checking account to your goal account. You can then use all of the goal account money you accumulate to build your emergency fund. Some of the most popular round-up savings apps you may want to research* include:
First, round up on entertainment
Amazon Prime is one example of a company that offers a wide variety of movies you can rent or buy to keep yourself entertained while at home. But since these movies start at $2.99, rounding up would only give you one cent in savings and wouldn’t do much to help build your emergency fund. That’s why you should look for a round-app that allows you to increase your round up on every transaction you make. Acorns, for example, gives users the ability to round up by as much as 10 times.
Then, round up on snacks
If you’re trying to stay away from the grocery store these days, you’re probably getting your snacks and everyday groceries delivered through a service like Instacart or Shipt. With a round-up app, you can work on your emergency fund every time you pay for grocery delivery. If you spend $150.10 on groceries one week and use a round-up app, you’ll have 90 cents for your emergency fund. Without a round-app, you may not have the willpower or time to transfer 90 cents to your checking account and pad your emergency fund.
You can also round up on food delivery services. So if you take a break from cooking and treat yourself on movie night to a sweet treat from a local bakery or sushi from a nearby restaurant, you can save even more for your emergency fund.
Continue to use round-apps when life returns to normal
Eventually, the quarantine will come to an end and life will return to normal, or as close to it as we’ll get post-coronavirus. You’ll spend less time at home and probably at least some time at an office, gym, restaurant, movies, and other places you used to frequent before the virus hit. When this finally happens, you can continue to use round-up apps and round up on your purchases, especially if you’re able to get your income up. By doing so, you can build a hefty emergency fund and avoid a great deal of debt and stress every time you encounter an unpleasant financial bump in the road.
And continue to work on your financial health
Learning how to deal with debt, money, and planning for your future doesn’t need to be hard. We have developed a simple to follow guide to help you find the tools you need to move to a better financial future. Get started by downloading our free guide right now.
*We have linked to quite a few apps and other companies in this post. These are not recommendations and we receive no money for mentioning their names. We only link to bring you quick access to resources we think you might want to look into.
- Ready to Teach Money Skills at Home? (Freedom Debt Relief)
- What Happens if You Can’t Pay Rent This Month, or Next? (Freedom Debt Relief)
- A Coronavirus Financial Plan: 5 Steps (Freedom Debt Relief)
- The 5 Best Round-Up Apps For Saving Money (Forbes)