Building emergency savings is a top financial resolution for 2023, research shows. Here’s how to get started – CNBC

How to build emergency savings

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When it comes to financial resolutions for 2023, one goal is at the top of many people’s lists: building an emergency fund.

A recent research from Personal Capital found that 31% of respondents want to increase their emergency savings, surpassing other goals such as buying a car by 15%; saving to buy a house, 9%; or hosting a wedding, 8%.

Setting aside savings for unexpected expenses, such as medical bills or car repairs, helps people avoid high-interest debt and also stick to long-term goals, such as retirement savings.

Not having an emergency fund is perhaps one of the biggest financial mistakes you can make, personal finance expert Suze Orman said recently.

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“The majority of Americans, in my opinion, barely have the money to pay for their day-to-day expenses,” Orman said.

Surveys consistently show that individuals would have a hard time coming up with the money to cover unforeseen expenses $1,000 or even $400.

If you want to increase your emergency savings in 2023, these tips can get you started.

1. Reduce your monthly bills

Chances are big savings can be found by reassessing your day-to-day expenses, according to certified financial planner Ted Jenkin, CEO of Atlanta-based Oxygen Financial and a member of the CNBC FA Council.

Jenkin, who co-wrote a book called “The 21-day budget cleanserecommends people take a detox-like approach to their household budgets.

Look at the 21 biggest bills you have – if you have that many – and try shopping around or changing them.

Take your bundled internet, telephone and cable bill, for example. Ask your provider if there is a possibility for a better package or rate. Also, explore the other options available through other companies.

“Most people really haven’t taken the time to look at where they’re overspending and what the difference is,” Jenkin said.

2. Review your credit card habits

Prices were higher during the holiday season, driving consumers who turned to credit cards into greater debt LendingTree Survey recently found.

That’s “troubling” now, as interest rates on those debts are poised to keep rising, according to Matt Schulz, lead credit analyst at LendingTree.

By simply asking for a lower interest rate, you may be able to pay back how much it costs to pay off those debts, LendingTree has found.

It can also help to look for better rates elsewhere – through a credit card with 0% interest balance or a personal loan.

Also, take stock of all the rewards you’ve accumulated to see how you can turn them into extra cash, Jenkin said.

Many people have unused benefits that they haven’t used, such as points to lower your credit card bill.

“It’s found money,” Jenkin said.

Sharon Epperson's money moves towards 2023

3. Look for higher rates for your money

As interest rates rise, that’s good news for the money you can make with your money.

Online savings accounts and certificates of deposit, or CDs, take care of the highest interest rates in more than a decade.

If your emergency fund is less than the three- to six-month expenses usually recommended by experts, quick access to your money should be your number one priority, said Greg McBride, chief financial analyst at Bankrate.com.

Then online savings accounts may work best. Even putting away a small amount of money each 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 — aside from family heirlooms or holiday decorations — it’s time to sell it, Jenkin said.

For example, if you haven’t worn a shirt in a year, you can unload it on a website like chic. Electronics you don’t use can be sold on sites like Decluttr or Facebook, Jenkin said.

“There are tons of apps and websites to sell your stuff,” Jenkin said.

If you’re not ready to part with an item forever, like an extra car, consider renting it out on a website like Turo.

5. Pick up a side business

Generating more money doesn’t have to stop with selling your stuff; you can also sell your skills, Jenkin said.

Websites like Fiverr let you list your services so you can generate extra money.

“If you have a side hustle, skill or talent, try to earn that extra income to build a cash reserve,” Jenkin said.

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