How Can Low Income Workers Build An Emergency Fund?

Building an emergency fund might seem impossible for some low-income workers, but Wisconsin Auto Title Loans, Inc. is here to show you otherwise. An emergency fund is essential for everyone, as it can help you quickly overcome a financial hurdle.

In this quick article, you’ll learn how much you should save for emergencies and the five steps for low-income workers to build that fund quickly.

How Much Should You Save For Emergencies When You Have A Low Income?

First, you must understand that everyone's emergency fund is different in size. Instead, it would be best to plan yours according to your income and monthly expenses. 

That way, you’ll have a much more accurate goal to save towards.

As a general rule of thumb, your emergency fund should have enough money to cover three to six months’ living expenses.

With that much money saved, you could continue paying your bills for at least six months if you ever lost your job. Those funds could also help you cover the costs of an emergency to overcome a financial hurdle.

5 Steps For Low-Income Workers To Build An Emergency Fund

Saving up to six months of your income for an emergency fund can seem challenging, especially if you’re a low-income worker. 

However, it’s not impossible. The process will take some time, but you will be glad you collected that money if you ever experience a financial emergency.

Here are five ways a low-income worker can build their emergency fund:

Step 1: Calculate Monthly Expenses

First and foremost, you must calculate your average monthly expenses. That should include your utilities, rent, food costs, and anything else you must pay to sustain your way of life.

Be sure to include other, less regular expenses too. For example, you might also have quarterly or annual payments that you must save for.

Average the amount to determine how much you need to survive each month. Then, multiply that by 3 or 6 to determine the size of your emergency fund.

Step 2: Adjust For Special Needs

Once you calculate your monthly expenses, consider any other special needs you might have.

For example, some families have children who require unique medical supplies occasionally. Although that’s not a regular monthly expense, you must factor that into the size of your emergency fund.

Step 3: Consider Other Financial Goals

Setting money aside in your emergency fund should be your top priority. However, it likely isn’t the only one you have.

Like most people, you might save for other financial goals, such as buying a house or a car.

In this step, your focus should be on considering your other financial goals and how you’ll adjust your contributions to each one.

For example, you might want to pause your other financial goals until your emergency fund has enough to cover three to six months’ expenses.

Step 4: Save Regularly

Now that you know how much to save and have identified your financial priorities, it’s time to build your emergency fund.

The goal is to save regularly by setting money aside in a separate account each time you get paid. Automating those savings using features now available in most banking and finance apps can make that process easier.

Remember: you must not use your emergency fund's money for non-emergency reasons!

Step 5: Earn More, Spend Less

Lastly, you can build your emergency fund by earning more and spending less.

Your emergency fund is a great reason to take on extra work and cut back temporarily until you have enough money in that account.

What Do I Do If My Emergency Fund Isn’t Enough?

Some emergencies will cost more than what you have in your emergency fund. That’s a fact of life that happens to everyone at some point.

When that happens, and you need extra emergency cash, consider borrowing from a quick and easy option like a title loan.

A title loan is a quick and easy way to borrow money if you own a car. Depending on the car’s value, you’ll need the car’s lien-free title to qualify for as much as $15,000.

Besides the title, you only need your driver’s license and the vehicle for a quick inspection. A representative will take a few moments to assess the car’s value and let you know how much you qualify to borrow.

Most importantly, if approved, you could receive those emergency funds as early as the same day or by the next business day.

Get Emergency Cash Now!

Building an emergency fund will take some time for low-income workers, so you should start immediately. Rest assured that Wisconsin Auto Title Loans, Inc. is ready to help if you need emergency cash!

Please feel free to take the first step anytime by submitting your information through the online form on this website. Some details include your name, phone number, and ZIP code. Soon after, a friendly representative will call to guide you through the rest of the process!

Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.