What are emergency funds for anyways? Well, basically an emergency fund is the allotted money that you would use in future emergencies such as payment for medical bills, car repair or home restoration.
Having an emergency fund is a must. If you want your financial plans or goals to be fulfilled, then you must consider your emergency funds as additional bills to be paid. By doing so, you would oblige yourself to set aside an extra amount each and every month that would become your emergency fund to be used in the future.
Making a budget of your income can be really tough. With so many bills to be paid, it seems that there is not much money to allocate for your emergency fund. However, analyzing all your expenses can help you create an emergency fund. All you need to do is to trim down your expenses and only pay for what is needed. It is very important that you consistently set aside money for your emergency fund.
If you can manage to set aside an extra thirty to fifty dollars every month, you can be assured that you would have a good emergency fund. To know if you have a good emergency fund, check if it is equivalent to a total of your three months living expense. Set your emergency fund as your financial goal too. In this way, emergency funds would be a priority.
[sws_green_box box_size="468"] Unlike any investment which is based on the long-term saving funds, the success of emergency funds is based on the consistency in setting aside a part of the income on it. [/sws_green_box]
If you can make it a good habit to budget all your expenses, rest assured you would have a good emergency fund or savings at the same time. If you have a big emergency fund, you can divide it into two expenses: for Savings purposes and for emergency funds.
Budgeting is a choice. If you have financial goals, then it would be best to budget everything. You must be dead serious in order to budget wisely. Otherwise, you will only be fooling your own self.
Start an emergency fund today.
Tags: Money Management, emergency fund, budget, savings