Whether you are new
college graduate starting life or a married couple in your 40s , there’s one
thing for sure: We all need an emergency fund.even if we have debt
I know it can be
difficult to build this if you are living on student loans for new college graduate (or paying them back
in large sums every month.) or dealing with all of the kids expenses and having credit card debt. However, having an emergency fund in place is
the best way to ensure financial freedom down the road.
The average
recommended amount for a starter emergency fund is $2,000. This is what many
financial experts say is the amount of “unexpected” expenses that people incur
every year. I also recommend $2k even if you have some credit card debit. My favorite guru Dave Ramsey has recommended $1000 if you have credit card
debt, but life doesn't seem to hit for under $1k emergencies anymore This could be your car breaking down, a a sudden illness a root canal, or a large home repair. The purpose of the fund is that
you don’t have to put these expenses on a credit card or let them affect your
everyday life.
You may think that is
it s nice idea but that is a HUGE chunk
of chain for you and you might not have
extra money to build an emergency fund.
However, if you build
up an emergency fund slowly and steadily, you can reach your goal in a shortly without having it hurt too much. Here are some ideas on
how to do that.
Spring Cleaning
Pretty soon, you’re
going to hear a lot of talk about spring cleaning. Make this your year. Be
rigorous about what you want to give away. Have a big garage sale and put a
great amount of effort into pricing your items competitively and in an
organized fashion. People love organized garage sales. It makes them feel like
they are buying items that were well taken care of. Or maybe hit craigslist- do
you have any extra furniture, gadgets,. Just look in your closet . Any old text books. So, take a look around
your home. What can you sell?
Cut Out An Unnecessary
Expense
I’m not saying to cut
out an unnecessary expense forever, just long enough to build up an emergency
fund. For example, give you up a $100 a month cable bill would merit you a $1,200 emergency
fund at the end of the year. Giving up your $100/month iphone would do the
same and you can start using a prepaid cell phone. .
You could also cancel your $60/month gym membership to get a $720 emergency
fund by the end of the year. Exercise at home or maybe taking up running. Take a
look at what you spend every month to see what you can easily and
painlessly cut out.
Automatic Deductions
The easiest way to
build an emergency fund is to set up automatic withdrawals in a separate
account also known as pay yourself first.
On each pay day, set up a
withdrawal to go into the emergency
savings account.
It only takes a tiny bit of effort to reap big rewards when it
comes to setting up an emergency fund. Start today! I promise you won’t regret
it.
2 comments:
Some great ideas here - just pinned them on my thrift board.
Alice @ Mums Make Lists
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