If you are looking for reasons why you should have an emergency fund, then these will fall into the category of budgeting and having control of your finances, even ones that you can’t control in the future. There is an article that highlights some basic steps that you can take and this is important in any budget that you look at the bigger picture, you might think that if you put all spare money into a debt reduction it will be the best option, but this is not the only thing that you should be considering when it comes to planning a great budget.
A budget needs to consider all aspects of the financial responsibilities and the end of the budget the figure that you are looking for is zero, this means that you have allocated all the money and that you are making sure that every penny is accounted for. You need to consider all the aspects including saving for the odd expense that you haven’t planned for, there is not going to be a set amount for each person that you will need to have access too. It will depend on the personal situation and there are many different aspects that you will need to consider and creating a budget that works for each individual is essential.
This article touches on the basics as to why you should be setting up the emergency fund, but it is there to find ways to help you start to fund this account.
The reasons behind getting an established emergency account is that if something happens and you need quick access to your money and you need to know that this money can be used to help pay for those emergencies like a car break down, or a medical bill that wasn’t expected, the emergency fund can save you money because you won’t need to borrow any money to pay for these repairs and unexpected bills.
The article expresses briefly that the first steps to creating an emergency fund is to first start with a budget. It is only when you know what money that you have coming in each month can you work out how much you can afford to pay into an emergency account. You will need to make sure that you have included a debt management plan and have some prevision for your retirement in your budget. Only then will you be truly ready to work out how you are going to fund this new account, one that can save you money in interest payments that you will no longer need if there is a problem.
How to fund the account
One of the major questions that you will probably ask is how to fund this account and it is important to consider where you are going to get the money from. This article touches on this and has come up with some great ways to start and boost that ever important account.
- The first suggestion that the article highlights is paying your own savings accounts first. This notion has been around for a long time and this comes from your budget, when you are planning your different areas of expenditure, don’t fall into the trap of saving whatever is left at the end of the month, or when you have paid everything else because you will tend to put less into the savings account. You can do this by various means that you are able to put a direct deposit from your account into your savings account will save you time, but make sure that you have completed your budget carefully so you know what spare money that you will allocate to your savings account, you do not want to have to transfer the money back out because you forgot a bill payment.
- The next suggestion on the article is to sell things that you no longer need or require. This will give you space and it will free up money that you never would have acquired. This can be on the many internet sites or as the article suggests you might choose to hold a garage sale. It is possible to make some money but people tend not to make vast sums of money and you need to be dedicated to pay this money into your savings account and not to have a little spending spree on more items. The best option when you have made some money with one of these sales is to put a percentage into the savings account and for the remaining amount use this as the funds for a little treat.
- The third suggestion that the article suggests is to increase your income by getting another job, having a second income will increase the amount of money that you will be saving. But you will need to pay tax on this income as well; you need to think carefully because if you need to pay out more money for clothes or fuel it might cost you more money in the long run.
- The forth suggestion is to work freelance, this is a growing industry and it is one that you might do well in, but it will take hard work and dedication to make money with working freelance. You will need to remember that any freelance work that you undertake will mean that you will need to register as self-employed and this could mean that you will need to consider the tax implication that will be involved in making money from freelancing. The article implies that it will be easy to make money and this isn’t always the case, you need to make sure that you understand all implications before taking the freelance plunge.
- Keep the change is the final option that the article discusses, this is the principal that you round up money that you spend and the change becomes the separate commodity that you can use to build up a savings account with, and you will be surprised how quickly this change can build up.
As with all articles that you read it is important to make your own mind up about the different advice that you are getting. However, this article makes a lot of sense in many ways. It looks at the importance of having that account that you can turn to when the worst happens. This is important to achieve even if you have debts, you want to be able to afford these slips in the road that always happen and that way you can avoid the debt that in the past would have occurred.
There is nothing worse than saving money every month to pay back the debts that you already owe only to find that you have no money left to pay for the problems in life that normally happens to throw a spanner in the debt reduction plan that you have created.
Again this is a great article if you are looking to find ways in which you can increase the funds in an emergency account, it will enable you to take the pressure of your monthly budget.
Therefore, this article will make you think about how you can start growing money in an emergency account, and it is a great little article that will make you think about ways to save money for those unexpected bills. How do you fund your emergency fund?