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Let's face it. You need money for unexpected life events. You just do. By starting your emergency fund, you will be better prepared for unforeseen problems. Check out today's contributed post and start saving more money.
You never know what the future has in store for you, which means that you should be ready for any eventuality. Emergency funds are important for your financial success and they can come in handy for medical emergencies.
An emergency fund should be one of your most important saving priorities, as it can keep you from plunging into debt and it could shield you from the high cost of borrowing.
Here are some tips that will help you to start your own emergency fund.
If you do not know how much money you bring in or spend per month, you should start tracking your income and expenses. Doing so will let you know the amount of money that you have left over after paying your bills. Make sure that you include recurring costs such as childcare and utility bills. You can store the left-over money in your emergency fund.
Your emergency fund should include three to six months of living expenses. If you have a stable job as well as other ways of getting credit at your disposal, you can go with a low emergency fund figure. On the other hand, if you are nearing your credit limit and your job is not stable, you should consider putting more money into your emergency fund.
Got a budget? No? Here's how to get one.
Setting a saving goal and coming up with a plan for saving go together. Your plan should include measurable and specific targets that you can work toward. For instance, you could plan to save an extra two hundred dollars per month and stash it in your emergency fund.
When disaster strikes, you need to be able to access your money quickly without having to jump through hoops. The best place to store your emergency savings is a liquid account to ensure that you have easy access to your account. A liquid account can be a normal savings account at your local credit union or bank; this account should provide returns on your savings and allow you to withdraw your money whenever you want without penalties.
If you go for other options, including mutual funds and certificates of deposit, you should figure out the best way to access your cash in case of an emergency.
How to stop spending your savings and keep more money.
Once you come up with a plan for saving money, you need to stick to it if you want it to be successful. However, you need to know that this is the hardest part of any financial goal, including starting an emergency fund. Make sure that you set attainable and realistic goals to make them easier to achieve.
If you are not good with money, you can just set up automatic payments from your checking account to your emergency fund account. Moreover, you need to keep your emergency savings separate to ensure that you will only use them for emergencies. Writing down the purpose of your account will keep you from misusing the money.
Once you put away a good amount of money, you might feel tempted to start using it for non-emergency situations. However, you should try your best to resist that temptation. Your emergency fund should be put away for a rainy day. Once you spend the money in your emergency fund, it will be much harder to start saving again.
You should guard your emergency fund closely once you have it by treating it like an insurance policy. If your salary increases, you should match your monthly savings to your new situation.
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