29% of Americans used their emergency savings during the pandemic. Here’s how to replenish if you did the same
Have you plundered your savings since the start of the crisis? If so, you are in good company.
The pandemic has caused a world of financial turmoil for many people. Not only have millions of people lost their jobs, but many workers have been forced to leave the labor market due to health problems or a lack of childcare. So it’s no surprise to learn that 29% of Americans have been forced to dip into their emergency funds during the pandemic, according to a new Discover Personal Loans survey.
To be clear, the purpose of having an emergency fund is to cover unforeseen expenses or to deal with unforeseen financial circumstances, such as job loss. But if you were to loot your savings account during the pandemic, you might, at this point, be anxious to replace the money you had to withdraw. Here are some steps you can take to make it easier to replenish your emergency savings.
1. Review your budget
Keeping a budget is a great way to keep track of your spending and stay on track to meeting your savings goals. But if you are looking to replenish your emergency fund, it might be time to revisit your budget and make changes that will save you more money.
Take a look at your various expenses and identify those that can be classified as non-essential, such as cable TV, streaming services, and other types of entertainment. Then prioritize them and choose a few bills to reduce. That could mean keeping one streaming service but canceling another, or ordering take out only once a week instead of two.
If you aren’t already spending money on non-essential items, there might not be a lot of adjustments to make to your budget. In this case, your best bet may be to get creative with your existing bills. This could mean negotiating a better rate with your cell phone provider or finding a roommate to share your rent with.
2. Increase your income with a secondary activity
If you don’t have a lot of expenses in your budget to cut back, you may need to find a second job to replenish your emergency fund. The good news, however, is that there are plenty of opportunities for secondary turmoil available in today’s concert economy. And if you are able to devote the time to it, you could increase your income significantly.
Take a look at your schedule and figure out how many hours you can afford to devote to a side concert. From there, explore different options depending on your income goals and constraints.
If you need flexibility with your side business, you may want to focus on things you can do from home, like data entry or telemarketing. And if you can leave home but need to set your own hours, you can sign up to drive for a ridesharing service.
3. Bank any cash bonus you receive
You can earn extra money every now and then. This year, most Americans received a stimulus check in March, and while another isn’t likely to happen anytime soon, you never know what a bargain might befall you. You could end up with a larger-than-expected tax refund, or get a generous work premium.
Either way, if you can’t wait to replenish your emergency fund, take that extra money and pay it straight to the bank. You might be tempted to spend some of it, but if you stack it up, you might reach your goal much sooner.
If you have withdrawn money from your savings to get through the pandemic, there is nothing to be ashamed of or to be bad about. If anything, you should congratulate yourself for building up some savings to tap into in the first place. Nonetheless, you might be anxious to replenish your cash reserves, and these steps could allow you to do so sooner.