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Some adults can’t pay an emergency expense at all

To break the Federal Reserve data down further, 63% of U.S. adults could cover an emergency expense of at least $400 completely using “cash or its equivalent” (meaning that you covered it using cash, savings or a credit card paid off by the statement due date).

However, among the 37% of adults who revealed they could not fully come up with $400 to cover an unexpected expense without using a credit card or carrying a balance, 13% admitted they were unable to pay for it at all.

If you fall into the latter category, don’t panic: there are a few effective ways to boost your emergency funds so you don’t go into debt over surprise expenses.

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3 ways to boost your emergency fund

Having an emergency fund is essential for financial security and can help cushion the blow that comes from unexpected events such as medical bills, car repairs or even a job loss — and it’s never too late to start building one.

Not sure where to start? Here are some tips and tricks to help bolster your emergency fund and offer you some peace of mind.

Eliminate unnecessary expenses

If you’re lacking sufficient emergency savings, the first step is to cut out unnecessary expenses.

Start by tracking your monthly expenses using a spreadsheet or budgeting app. This will give you a clearer picture of your spending habits — and where you can make some cuts.

For example, cutting back on takeout meals and underutilized subscription services are a couple of the little sacrifices you can make in order to set aside some cash each month.

Set up a high-yield savings account

An easy way to grow your money is to set up a high-yield savings account. These accounts offer a higher interest rate than traditional savings accounts. As a result, you’ll generate more money over a shorter period of time.

People also use high-yield savings accounts as vacation funds or to help with major purchases, such as a home renovation or a new car.

In addition, having more than one account will allow you to take advantage of multiple perks, such as higher introductory rates or new account bonuses.

Take up a part-time side hustle to earn additional income

If you want to accelerate the growth of your emergency fund, think about taking on a side hustle outside of your 9-to-5 job. Or, if you’re retired and looking to generate more income, part-time work may be a potential solution.

You can become a rideshare driver, dog walker, data entry specialist or sell your stuff online.

Adding a second revenue stream is a great option to help accelerate your financial growth and prepare yourself for life’s (financial) surprises.

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Adam Palasciano Freelance Writer

Adam Palasciano is a freelance contributor to Moneywise.

Disclaimer

The content provided on Moneywise is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter.