This is the season of tax returns for many people receiving payments from their 2018 filings.
Getting what feels like bonus money may give you the urge to buy a TV, steak dinner, new clothes or a fun trip.
Other people may annually use this as a time to catch up on bills and get ahead for the year to come.
None of this is across the board a good or bad idea; people’s individual situations and circumstances will always drive different needs and choices.
An excellent additional use for a windfall payment such as a tax return is allocating a portion of the money to kick-start an emergency savings fund.
This is by no stretch as fun as spring break in Florida; however, it will always serve you well at some point in the future.
According to the National Financial Capability Study completed by the Financial Industry Regulatory Authority, 50 percent of Americans do not have money set aside for emergencies.
It is recommended that people have an emergency savings fund containing three to six months of living expenses they can access quickly.
This is not realistic for a lot of people, thus the half of us without emergency savings.
Even if compiling that much extra money is years away and feels unlikely in your current situation, it should not mean foregoing emergency savings altogether.
It will take time and commitment, but is an important step to improving financial health and stability.
Keep the end goal in mind; working toward something specific is a key motivator for saving money.
Start to set money aside automatically by splitting up direct deposit or with your banking institution.
If you pay yourself like every other bill, the money will not be as tempting to spend.
The starting amount can be small to make the least amount of trouble in your current budget. There is no rule to how much or how quickly you save. Just beginning is the important part.
After the account is established, continuing to save will take no effort because you have set up initial directions for the payments.
In a best-case scenario, you will “forget” it even exists.
Additionally consider depositing portions of any extra money you receive: gifts, overtime payments, bonuses, inherited money or anything else out of the ordinary.
Allowing the process
When (it will be when and not if) something unexpected comes up and you need to dip into your emergency fund, do not get discouraged.
Once you start using the fund as it is designed, do not think of it as a setback — this means it is working!
Having the money available means no need to go without or borrow money for the unexpected or emergency situation.
The emergency savings fund will continue to be a cycle of dipping into the fund and then building it back up.
Please visit https://fyi.extension.wisc.edu/moneymatters/ to explore different financial topics and complete several self-guided modules.
Mary Metten is health and well-being educator for the University of Wisconsin-Extension in Kenosha County.