People need to realize how that money adds up quickly. That money could be added to a savings account building a emergency fund. We all need a emergency fund.
Adding $10.00 a week to a emergency fund is an important step to financial freedom. If you don't touch it at the end of the year you will have $540.00 which is a great start. This could help out in a pinch if you need car repairs or home repairs done.
Nothing ever goes as
planned. Hence the reason everyone needs a emergency fund.
The majority of people
could avoid bankruptcy if they had set aside a little money for a rainy day. A
good number of people out there are living paycheck to paycheck. And any
expensive car repair could put them into bankruptcy. Not to mention unexpected
medical emergencies, appliances that stop working, getting laid off from a job,
a long illness or an accident. You use an emergency fund for any cost you
cannot anticipate.
Avoid letting unanticipated
costs or happenings from putting you in financial ruin. You can build an
emergency fund by following these simple tips.
Your goal for your
emergency fund should be 6 months of your present take home money. So whatever you earn in a 6 month period
(this is take home pay not before taxes) should be your goal to save. Having money in the bank to cover your needs
(food, shelter and clothing) will be a relief when it is built.
Then take the above
number and set goals with date. When
will you save $1000, $2000 and so forth.
Always put these funds
in a savings account or money market account that can be accessed but not to
easily. You want to make sure your never
tempted and never keep these funds mixed with your bill paying funds.
Make sure to check out
online banks and credit unions for locations to stash your emergency
savings. They usually pay more than the
big banks like Bank of America and Wells Fargo.
Setting up a direct
deposit from your paycheck into your emergency fund account will help you build
your fund and set the tone of paying yourself first.
You do need to make a
monthly budget to make sure you keep enough for true expenses. Dining out and a morning latte should be the
last thing you spend money on. Make sure
your savings always takes priority over these.
Rome wasn't built in a
day, and neither will you emergency fund.
Any action you can take to begin an emergency fund will do you good. Don't
be troubled to start with a small amount.
Then try to increase it whenever possible.
The best way to really
kick your emergency fund off is by saving and putting away your tax
return. Millions of people get returns
only to blow them on items that aren't necessary. Even if you don’t take it all you should be
putting some of it away or using it to pay off your debt. Once you have paid that debt off though take
the monthly payment from it and use it to build your emergency fund.
Start off the New Year
on the path to financial freedom and get saving today.
