Save Emergency Funds For A Rainy Day
Tips For Saving Money
It is important to set aside money for emergency funds and what we call a "rainy day". It is one of the fundamental principles when it comes to creating financial security. In this day and age there are always going to be unforseen circumstances and unexpected expenses that come our way, and it is nice if we can plan for those things. With job layoffs and uncertain economic times we can never be too prepared for the future.It is also important to ensure that you have the funds set aside for things such as, car repairs or medical bills as a result of an accident.
One of the biggest downfalls that come from not having available funds, is the obligation to place debt on high interest credit cards. It is also tempting to take out additional mortgages or loans, which could have high interest rates that ultimately increases the overall amount due and may take several years to pay off.
One of the best tips for saving money is to put as little as $20 to $50 into a savings account every month. Doing this simple thing can help to secure you financially against any possible emergency that may come up. By breaking your payments down to weekly or monthly, it won't seem so overwhelming. Just start moving forward, even if just with small amounts.
The goal of creating an emergency fund is to create the one that ideally equals the equivalent of three months of your living expenses. This makes it not only a significant part of your budget, as well as your financial security but also a significant part of your assets. The most important thing when considering an emergency fund is to ensure that your contribution to it is consistent.
Unlike savings for investment purposes or using investments as a form of savings it does not matter what the amount of return or the amount of interests gain on your funds ultimately is after all, the entire purpose of having a savings fund is to have a fixed amount set aside. It does however need to be placed in an account that is easily accessible, should the need arise.
No matter what your financial status, it is important when looking to construct a rainy day fund, that you know what your current financial situation is so that you know how much can be set aside each month without creating issues in your overall expenses. Once you have an idea of where all of your income is going, you can alter your expenses to include your contribution to your emergency fund by cutting back on miscellaneous or unnecessary expenses.
In the case of emergency funds, the purpose of budgeting would be to locate and allocate the necessary funds for that purpose. When creating a budget it is always important to remember that ultimately that budget needs to have a goal in order to be successful. In other words, why are you budgeting or what is the purpose behind looking into your financial situation.
Some of the places that you can place your funds for the future for easy access are accounts such as checking, savings or money market. Certifications of deposits also many CDs can also provide a great place to put money where it can not only earn a return but also be easily accessible.
It is not uncommon for individuals to use their budget to create a single savings, which can be used for general purposes including emergency funds. Others may take out a single lump sum from their monthly expenditures and place half into a general savings account and the other half into a rainy day funds account.
Do whatever works for you, and whatever gets you ahead and working toward financial security for your future.
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