By Carl Ivory
If you are curious about how to put together an emergency fund but have no idea how to do it, here are some emergency fund tips for you to follow. To help you manage your money, you have to set aside a specific amount for your emergency expenses. Once you determine the amount you need, you then have to determine how much you can save each month. You also have to take into consideration any possible investments that can give you a good return. The following are emergency fund tips that will get you started with managing your money.
Here are some emergency fund tips for those who aren’t quite sure how they should start managing their emergency fund. One of the things that you need to pay attention to is your expenses. Prioritize all your daily expenses. This means you have to figure out what needs to be paid for and what you can do without. If you have high-interest savings accounts, it would be a good idea to pay off these first before saving any more. If you are going to be paying off high-interest savings, make sure that you will also be able to pay your monthly bills at the same time.
For you to be able to survive financially until your next paycheck, you must start cutting down on your expenses. Aside from cutting off your car expenses and utility bills, you have also to cut off any non-essential costs. For example, you can stop taking long drives to work or avoid going on unnecessary shopping trips. You also have to prioritize your daily expenses. You have to see what you can cut off like student loans, high-interest savings, and other extra income paying expenses. This way, you can have more money for the emergency fund.
Other than that, you have to set aside a certain percentage of your monthly income as an emergency fund. Some people opt for using credit cards to save money, but this should only be your last resort. It is always better to use your emergency fund or personal finance to pay for any unforeseen events. When you go out shopping, shop smart. Do not get lured by the salesmen who may lead you astray.
Make sure to keep track of your expenses and your emergency fund. Write down the amount of money that you have saved. Also, write down the costs you will have to pay for and the amount of money you will need to spend on your unexpected emergencies. Then, see that you only get to spend your savings account on what you will need. Do not spend on trivial things. Most importantly, prioritize your emergencies.
If you can not come up with enough money to pay for unexpected expenses, then consider getting a high-interest debt to replace your existing loans and credit card debts. High-interest debts are easy to pay because you will get to make monthly payments towards their principal amount instead of paying only the interest rate. You can get a home equity loan, personal loan, or a payday loan without much hassle. These emergency savings accounts also come with an asset protection feature wherein if you cannot pay for your debts; your asset will be protected and sold to pay off your creditors. However, make sure that you have a financial planner so you would not have to worry about the possible problems that your asset might get stuck in.
Your emergency fund or personal finance should be used in paying for any unexpected medical expenses or dental expenses. It is also advisable to put towards extra savings if you encounter a disaster such as a fire or a flood. It is a good idea to invest your emergency fund in a high-interest savings account with low fees. In addition, ensure that you have at least five to ten percent in your savings account to be prepared for emergency situations.
Aside from emergency fund tips, it is essential to educate yourself on effective money management to prevent spending more than you have. Learn to cut down unnecessary expenses and focus more on paying for essentials. Save your receipts or bills for those monthly expenses that you know you have to pay for. Doing these simple things will help you save on unnecessary costs that lead to more significant financial problems.
