Emergency Funds: A Necessity In Today's World
It is a good idea to have emergency funds in your family budgeting plan. The future is unpredictable and you could find your in the hospital for some reason, or you may be in an accident and total your car, or you could easily be laid off from your job. You should be prepared in case one of these emergencies occurs so that you can continue to pay your bills and buy food.
You should have somewhere around three to six months worth of normal expenses in your emergency funds. These monthly expenses would be your rent or house mortgage, any payments for home or life insurance, payments to the utility companies, credit card payments, loan payments, money for a phone or cable bill, the money you would spend for food and other living expenses. You may have to pay the entire premium on your health insurance if you are out of work for a time so add those on too.
It sometimes takes about six months in order to get a new job if you loose your old one and that is why experts suggest a six month emergency fund. However, it seems most people live totally on their paycheck and do not have much left over in order to start an emergency fund.
If you must start an emergency fund try starting slowly. You will need to set up a budget and stick to it and it would not be a bad idea to set up some goals as well. That might entail sacrificing some things for awhile like certain channels on cable or cable itself. If you go out to eat frequently stop and make your own dinner putting the money you would have spent out in the emergency fund.
Put your emergency fund into a bank savings account. You can add to one you already have or start a new one. Banks permit two or more savings accounts and if yours does not, just go to another bank and set one up. Just be sure there are no penalties for not having a certain amount in it or there are no extra charges for having the account. Do not have a debit card that is associated with this account. That way you won't use it for things you should not buy. Make sure to earmark a percentage or certain amount from your paycheck to go into this account.
Use direct deposit if you can to put the money directly into the bank. If your employer does not participate in direct deposit make sure you put the correct amount into the emergency fund after every paycheck before you use any money for anything else. Once you start taking it out you won't even notice it anymore. Another way to increase that emergency fund is to put any extra money you might get away. Working overtime will bring in some extra money so put that in or if you do a small job for someone on the side put that amount or a percentage in the fund. If you go to a restaurant two times a week only go once and take that money you would have spent for the second night and put it in the account.
Your emergency fund will grow faster than you expect it to once you get used to it. When you get a large amount of money in the account think about putting a chunk of it into a Certificate of Deposit or CD or into a money market. Always do research to see where you are going to accrue the most interest. Do not put this money into the stock market or in a mutual fund or you may loose the whole thing in this economy. You must assure that you can take out money if you need to. If you put it in stocks it will take a longer time to get funds.
Financial emergencies are not confined to sick time or job loss. Owning a home comes with some problems such as repairs of major appliances like the furnace or taking care of big ticket items like a new roof. You cannot wait a long time to fix some issues and in order to avoid taking out a second mortgage you may have to use your emergency fund. If you rent you may have to pick up and move and you will have to have a security deposit and money to move. You may need to fix the transmission on your car or you may be in an accident and have to buy a new one. Start saving an emergency fund because you never know when you might really need it.
About the Author
When planning your family budgeting plans it's an absolute must that you consider emergency funds as they are a important part of the personal finance process.
Previous Article -
Add Your Picture
Article Submitted By:
RebbecaMyers
Subscribe To: RebbecaMyers Rss Feed
This Article Has Been Read 574 Times
Publish/Share this article
Remember: The article body, title, author bio and links may not be changed or removed. By publishing this article, you agree to all the terms in our Terms of Service.
Rating: Not yet rated
More articles in this Category
Emergency Funds: A Necessity In Today's World
Why Payslips are Important?
Learning the Wills of Texas
Easy Credit Solutions
Save A Little Bit Of Money And Gas By Shopping On The Web.
How To Plan a budget for retiring
An Introductory Guide To Wills and Estate Planning
Improving Your Family Finances with the Help of Childcare Vouchers
Can I buy a home with a bankruptcy?
Credit Inquiries: How They Affect Your Credit History
Retirement Planning Careers Offer New Job Opportunities
The Basics of Family Financial Planning
Britain's Debt
How to snowball your debt
How Do Finance Blogs Help in Your Finance?
Prevent Foreclosure. The Necessary Steps
Improve Your Financial Health in 2008
The Benefits Of Personal Financial Planning
What You Should Know About Chexsystems
