When it comes to saving money, you can’t underestimate having an emergency fund, just in case something comes up so you’re prepared.
The problem is the general public doesn’t do well with preparation.
That “not doing well” comes in the form of a lack of an emergency fund for nearly 60 percent of the population that doesn’t have any money set aside for just such an event.
Not having an emergency fund or money in a saving account means you’re running the risk of having such a catastrophic event and not being able to fix it unless you tap into money that, quite frankly, isn’t yours.
That means you’ll be borrowing or running up your credit cards and, in some cases, maxing them out just to fix your roof, change out your transmission or those braces for the kids.
The general rule of thumb is you should have about seven months of salary set aside just in case you would lose your job or have something come along that you simply can’t handle with a paycheck or two.
Some will ask how exactly you can save that kind of money, and quite simply the answer is the same each time: budget accordingly.
Having a budget will ultimately allow you to look at your expenses and income and then begin to find exactly what is holding you back from being able to put money aside when you get paid. A budget can’t be just the large scale items, such as your car or home, but also should include bills and daily expenses, including gas, coffee, bottled water or anything else that is consistently purchased.
Budgets are, of course, only as good as how specific they are and if you actually are inclined to cut some expenses in order to save. The only other option is to have more income, but that isn’t realistic unless you get a different job or a second one. You have to look closely at some expenses that can be cut or adjusted, such as cell phones, cable television, clothing and eating food out at restaurants that isn’t part of the line item of grocery store shopping you’re doing.
Breaking away from the 60 percent of people who have no reserve money set aside is easier said then done, but without a budget that matters or is followed, you’ll be part of that majority that might wish they had thought of saving much sooner.
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