How to Start an Emergency Fund with Low Income: It’s Not As Hard As You Think

<p><p><figure data-trix-attachment="{&quot;contentType&quot;:&quot;image&quot;,&quot;height&quot;:2000,&quot;url&quot;:&quot;https://mata-prod.sfo2.cdn.digitaloceanspaces.com/news/image-article/36707178-385b-476f-b6c5-e57299f8d17a/1726652348061.webp&quot;,&quot;width&quot;:800}" data-trix-content-type="image" class="attachment attachment--preview"><img src="https://mata-prod.sfo2.cdn.digitaloceanspaces.com/news/image-article/36707178-385b-476f-b6c5-e57299f8d17a/1726652348061.webp" width="800" height="2000"><figcaption class="attachment__caption"></figcaption></figure></p><p><br></p><p><br></p><p>Everyone should know how to start an emergency fund with low income. Just because you don’t make a lot of money, it doesn’t mean that you can’t save up. Setting aside some money may seem difficult, especially if you have a limited budget, but it can actually save you when you hit the rock bottom. The idea is to learn some of the helpful tips so you can save up without sacrificing your own basic needs.&nbsp;</p><p><br></p><h2><strong>How to Start an Emergency Fund with Low Income: The Importance</strong></h2><p>No one knows what the future brings. As the name suggests, emergencies are mostly unpredictable. If you aren’t prepared, you will likely deal with financial chaos that causes you to derail from your solid finance. Emergencies can be anything, from a sudden accident or illness to a serious home repair.&nbsp;</p><p><br></p><p>Unfortunately, you can avoid emergencies. You can only come prepared. And this is when the emergency fund is badly needed. When you already have one (no matter big or small), you can avoid the financial sting that can affect your wallet. Your life won’t have to fall apart.&nbsp;</p><p><br></p><h3><strong>Emergency Fund Concept</strong></h3><ul><li>Emergency fund is the extra money or a separate bank account, being set aside for emergency situations, like home repairs, medical bills, and others. Not only it can be used to cover sudden expenses, but it can also be useful when you have to deal with extended medical issues or job loss.&nbsp;</li><li>It serves as your financial cushion, allowing you some peace of mind and help you breathe under heavy pressures.&nbsp;</li><li>Emergency fund can be used to avoid personal loans (which can be highly costly) or dependency on credit cards (that usually charge high interest).&nbsp;</li></ul><p><br></p><h3><strong>Reasons to Set up Emergency Fund</strong></h3><ul><li>You only have one income source. Single parents or families with only one income source need to have this fund so they can still survive the hardship.</li><li>You have your own business or you are a freelancer. Since you mostly don’t get benefits from your workplace, you need to set some money aside.&nbsp;</li><li>You have health issue. Everyone knows that healthcare costs are pricey, so it never hurts to be prepared.&nbsp;</li><li>You have a financial goal. When you dream of a sound financial stability, you must have an emergency fund.&nbsp;</li></ul><p><br></p><h3><strong>How Much to Save?</strong></h3><p>There is no fixed rule on how much you should have for your emergency fund. But people with tight budget often struggle to set some money aside. If you really have a limited budget, try to set $5 each day. When it feels easier and it’s somewhat automated, you can increase the amount up to $10 a day.&nbsp;</p><p><br></p><h3><strong>How to Start</strong></h3><ul><li>Take a look at your financial condition. Consider your earning and make lists of your expenses. Having a serious evaluation on your transactions can seriously help.&nbsp;</li><li>Make it automatic. Make sure that your saving happens automatically, so you won’t have to set the money aside on a monthly basis.&nbsp;</li><li>Have it out of sight. When you ‘forget’ that you have extra fund, you won’t be tempted to use it. Make your account difficult to access or out of your sight.&nbsp;</li><li>Be committed. Even when you start off with $2 a day, it takes serious commitment for your fund to pile up. Be disciple and be committed!</li></ul><p><br></p><h3><strong>Bottom Line</strong></h3><p>No one likes emergency situations – not even those with solid and strong finance. However, emergency funds can act like your safety net when times are hard and you experience some (financial) problems. Everyone should have their own fund, even those with good income. It’s not about how big or small your earning is. It’s about the knowledge on how to start an emergency fund with low income, so you can always come prepared.&nbsp;</p><p><br></p><p><br></p><p><strong>Sources:</strong></p><p>https://www.jago.com/en/blog/how-to-save-emergency-fund-locked-pocket</p><p>https://www.consumerfinance.gov/an-essential-guide-to-building-an-emergency-fund/</p><p>https://www.synchrony.com/blog/banking/small-budget-emergency-fund</p><p>https://www.bankrate.com/banking/savings/starting-an-emergency-fund/</p><p>https://www.wellsfargo.com/financial-education/basic-finances/manage-money/cashflow-savings/emergencies/#:~:text=How%20much%20should%20you%20save,six%20months'%20worth%20of%20expenses.</p><p>https://moneymentors.ca/money-tips/how-to-start-an-emergency-fund/</p><p><br></p><p><br></p></p>