Rampant inflation wreaked havoc on consumers in 2022, and many middle-income households had to make changes because of it. For some, that meant taking on debt. For others, it meant cutting back on spending, even to the point of skimping on essential expenses.
Not surprisingly, 51% of middle-income households had to tap their emergency funds last year, according to a recent survey by Primerica. And if you landed in a similar situation, you may be eager to replenish your savings account balance as quickly as possible.
See, we don’t know if a recession will hit the U.S. economy in 2023. But in the aforementioned survey, most respondents said they think conditions will worsen in 2023. And if the economy tanks, you’ll want a stronger emergency fund, not a partially depleted one. With that in mind, here are some steps you can take to replenish your emergency fund after a recent withdrawal.
1. Rework your budget
You may have money allocated to different expenses, from your rent to your car payments to your leisure spending. Clearly, if you’re locked into a lease, there’s not much you can do to lower your rent costs. And if you need a car to function and you own a modest one, then you may be stuck with your $340 monthly payment.
But there may be costs in your budget you can cut temporarily to replenish your emergency fund. That could mean canceling some subscriptions for a period of time until your savings balance grows nicely.