Six Steps For Saving Up For Emergencies When Studying Online

Earning your degree online can lead to considerable savings in terms of things like transportation and accommodation. However, there are still plenty of emergency situations that might crop up and require funds. For example, unexpected hardware failures or medical bills can lead to serious financial issues if you are not adequately prepared. Many students who find themselves in such situations end up having to rely on family support or using credit cards or loans to get through these situations, but these can have negative implications in the long term. A much better approach is to save up for emergencies and have a financial safety net that can safeguard against emergencies.

Step One: Establish Your Financial Goals

The first step in setting up your emergency fund is to establish how much you'll need. Depending on your lifestyle and financial situation, several factors will influence how much money you should have in your emergency fund. Obviously, the more money you have in the fund, the better, but for minor emergencies, you should aim to have at least $500 to $1,000. If you reach this goal, you can increase the fund's scope. For example, saving enough money to cover your basic living expenses for a certain period if needed.

Step Two: Create A Budget

A budget is great for setting up an emergency fund and is also a valuable skill that can be useful later in life. Start by calculating your monthly income and then subtracting your expenses to see what you have to work with. This can help you figure out how much you will be able to realistically put into your emergency fund every month without impacting your lifestyle too much. As a student, your income might be limited to sources such as a part-time job, scholarship, student loan, or family support, but studying online might also mean fewer expenses. Look for ways in which you can cut back on expenses, such as cooking yourself instead of dining out, canceling any unnecessary subscriptions or streaming services, or taking advantage of student discounts.

Step Three: Earn More Money

Cutting back on expenses is helpful, but you can better save up for emergencies if you find ways to supplement your income. If you are studying online, it means you already have the tools needed to perform freelancing work that can be done remotely. If the work ties in with your degree, it can be extra beneficial as you will gain experience in the process. Since your online degree schedule is more flexible than a traditional campus degree, it can also enable you to take on part-time jobs in your area. Many students supplement their income with part-time jobs in the retail, restaurant, or service industry sectors, as these tend to offer flexible hours.

Step Four: Keep Your Emergency Funds Separate

Setting up a separate savings account for your emergency funds is an excellent way to ensure you don't spend the money accidentally. Look for savings accounts aimed at students, as these tend to offer low or no fees and can earn you interest. Always read the fine print and avoid making use of services that penalize you for excessive withdrawal.

Step Five: Practice Self Discipline

An emergency fund is more than just about saving; you'll also need to learn to practice self-discipline. Once you have enough money in the fund, using it can be highly tempting, even if there is no emergency. That is why it is crucial to establish boundaries and clearly distinguish what constitutes an emergency. If you struggle with this, having an accountability partner to help you out might be beneficial. When you receive unexpected income, such as cash gifts or selling unwanted items, be sure to allocate at least part of this to your emergency fund instead of immediately spending it.

Step Six: Track Your Progress

Seeing your emergency fund grow can be gratifying, and using tools or apps can make the process easier to manage. For example, you can use budgeting apps to streamline the process of tracking your income, expenses, and goals.

What Are The Benefits Of An Emergency Fund?

One of the biggest benefits of an emergency fund as a student is the peace of mind that you can get through a financial crisis without it impacting your studies. This lets you focus on your academic performance instead of stressing about money. There are also a lot of long-term benefits associated with building up a habit to save. It can lead to better financial decisions and a proactive approach to managing finances later in life.

Conclusion

Too many students fall into debt or have to disrupt their education after encountering unexpected financial emergencies. While putting together an emergency fund is not easy, especially while studying, it can be done and make a huge difference. Having funds saved up for emergencies leads to peace of mind and teaches students valuable lessons that can help with their future financial stability.