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When it comes to financial resolutions for 2023, there is one goal at the top of many people’s lists: building an emergency fund.
A recent survey by Personal Capital found that 31% of respondents want to increase their emergency savings, and for other purposes such as buying a car, with 15%; saving to buy a house, 9%; or hosting a wedding, 8%.
Having savings set aside for unexpected expenses like medical bills or car repairs can help people stay out of high-interest debt and stick to long-term goals like retirement savings.
In fact, not having an emergency fund could be one of the biggest financial mistakes you can make, financial expert Suze Orman recently said.
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“Most Americans, in my opinion, don’t have enough money to pay for their daily expenses,” Orman said.
Studies consistently show that people will struggle to come up with the cash to cover an unexpected expense of $1,000 or even $400.
If you’re looking to grow your emergency savings in 2023, these tips can help you get started.
1. Lower your monthly bills
Big savings can be found by reassessing your daily expenses, according to Ted Jenkin, CEO of Atlanta-based Oxygen Financial and a member of the CNBC FA Council.
Jenkin, who co-authored a book called “The 21-Day Budget Cleanse,” advises people to take a detox approach to their household budget.
This means looking at the 21 biggest bills you have – if you have any – and trying to shop around or change them.
Take, for example, the Internet, telephone and cable bills. Ask your provider if there is an opportunity to get a better package or rate. Also investigate other options available from other companies.
“Most people haven’t taken the time to look at where they’re spending too much and widen the difference,” Jenkin said.
2. Reevaluate your credit card habits
Rates spiked this holiday season, prompting consumers to turn to credit cards to take on more debt, a recent LendingTree study found.
That’s “troublesome” now, because interest rates on those loans are poised to keep rising, said Matt Schulz, chief credit analyst at LendingTree.
By simply applying for a lower interest rate, you may be able to recoup the money needed to pay off those loans, LendingTree says.
It can also help to find better rates elsewhere – whether through a 0% interest balance transfer credit card or a personal loan.
Also, consider any rewards you’ve collected to see how you can turn them into extra cash, Jenkin says.
Many people have unused benefits that they don’t use, such as points that help lower their credit card bills.
“It was about money,” Jenkin said.
3. Get more bang for your buck
When interest rates rise, that’s good news for your money.
Online savings accounts and certificates of deposit, or CDs, are offering the highest interest rates in more than a decade.
With less than the three to six months of emergency spending that experts typically recommend, getting your money quickly should be your first priority, says Greg McBride, chief financial analyst. at Bankrate.com.
In this case, an online savings account may work best. Even taking out a small amount each week can add up over time, McBride says.
4. Sell what you don’t use
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If you haven’t used something in a year — other than family heirlooms or holiday decorations — it’s time to sell it, Jenkin says.
If you haven’t worn a shirt in a year, for example, you can get rid of it on sites like Poshmark. Your unused electronics can be sold on sites like Decluttr or Facebook, Jenkin said.
“There are so many apps and websites to sell your stuff,” Jenkin said.
If you’re not ready to part with something forever — like an extra car, for example — you might consider renting it from a site like Turo.
5. Do laundry
Having more money doesn’t have to stop at your store; you can also sell your skills, says Jenkin.
Sites like Fiverr will allow you to list your services so you can earn extra money.
“If you have a problem, skill or talent, try to get that extra income to build a savings account,” Jenkin said.