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When it comes to financial resolutions for 2023, there’s one goal at the top of many people’s list: creating an emergency fund.
A recent survey by Personal Capital found that 31% of respondents want to increase their emergency savings, topped by other goals like buying a car at 15%; saving to buy a house, 9%; or organize a wedding, 8%.
Having savings set aside for unexpected expenses like medical bills or car repairs can help people avoid high-interest debt and stick to long-term goals like saving money. retreat.
In fact, not having an emergency fund can be one of the biggest financial mistakes you can make, personal finance expert Suze Orman recently said.
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“The majority of Americans, in my opinion, barely have the money today to pay for their day-to-day expenses,” Orman said.
Surveys consistently show that individuals would struggle to find the money to cover unexpected expenses of $1,000 or even $400.
If you’re looking to boost your emergency savings in 2023, these tips can help get you started.
1. Reduce your monthly bills
According to certified financial planner Ted Jenkin, CEO of Atlanta-based Oxygen Financial and member of the CNBC FA Council, chances are big savings can be made by re-evaluating your day-to-day expenses.
Jenkin, who co-authored a book called “The 21-Day Budget Cleanse,” recommends people take a detox-like approach to their household budget.
This means looking at the 21 biggest bills you have – if you have that many – and trying to compare or change them.
Take for example your bundled Internet, phone and cable bill. Ask your provider if it’s possible to get a better plan or rate. Also investigate other options available from other companies.
“Most people really haven’t taken the time to see where they’re overspending and assess the difference,” Jenkin said.
2. Re-evaluate your credit card habits
Prices were higher this holiday season, prompting consumers who turned to credit cards to take on more debt, a LendingTree survey recently found.
It’s “disturbing” now because interest rates on those debts are about to keep climbing, according to Matt Schulz, chief credit analyst at LendingTree.
By simply asking for a lower interest rate, you may be able to reduce the amount needed to pay off those debts, LendingTree found.
It may also be worth looking for better rates elsewhere, either through a 0% interest balance transfer credit card or a personal loan.
Also, take stock of any rewards you’ve accrued to see how you can turn them into additional funds, Jenkin said.
Many people have unused perks that they haven’t taken advantage of, such as points to help lower your credit card bill.
“He found the money,” Jenkin said.
3. Look for higher rates on your money
As interest rates climb, that’s good news for the money you can earn on your money.
Online savings accounts and certificates of deposit, or CDs, have offered the highest interest rates in over a decade.
If your emergency fund has less than the three- to six-month expenses typically recommended by experts, having quick access to your money should be your first priority, according to Greg McBride, chief financial analyst at Bankrate.com.
In this case, online savings accounts may work better. Even saving a small amount of money a week can add up over time, McBride said.
4. Sell what you don’t use
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If you haven’t used something in a year — other than heirlooms or holiday decorations — it’s time to sell it, Jenkin said.
If you haven’t worn a shirt in a year, for example, you can dump it on a website like Poshmark. Electronic devices you don’t use can be sold on sites like Decluttr or Facebook, Jenkin said.
“There are so many apps and websites out there to sell your products,” Jenkin said.
If you’re not ready to part with an item forever, like an extra car, for example, you might want to consider renting it from a website like Turo.
5. Take a side hustle
Generating more money doesn’t have to stop at selling your stuff; you can also sell your skills, Jenkin said.
Websites like Fiverr will let you list your services so you can generate some extra cash.
“If you have a hustle, skill or talent, try earning that extra income to build a cash reserve,” Jenkin said.