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from: How to Safeguard Your Financial Life
Financial analysts and planners agree with one thing, to safeguard your financial life, one of the first thing that you should prioritize and put your efforts to is to have a reserve fund that will be available in case of emergencies. Most people are getting buried in debt because of depending too much on credit cards for circumstances like this, while realizing that since it is an emergency, you have the lack of monetary resources to pay off the debt.
How to Get Started
It is debated on how much you should save for your reserve funds. Yet it is agreed most often that reserve money that will be able to cover your expenses for three months might be good as well. It is wiser though to secure funds that will keep you off from using your credit card for a six month or a year’s period.
The amount that you will need to save in your financial reserves depends on your personal circumstances. If you have someone that can help and support you in case of financial breakdown such as having well-off parents, a financial reserved of three-months use may be enough. Otherwise if you are getting in debt with your credit cards and is paying also the 15% fees, you should think of saving enough money that you can use in half a year’s time.
With all the expenses it line, you might be confused where to place your money. Should it be the emergency fund, the credit card bill, your 401 (k) or the other bills. First you have to pay your credit card bills first. After that set some money for your 401(k) which may be helpful in case that you need to borrow money in the future. Having settled with this you can then find ways to fund your financial reserves.
Safeguarding your financial life can be quite hard at first in faced of bills that you ought to pay. And yet you have to initialize your saving at whatever cost. You can start by saving 5% of your pay check. If you have a problem of setting aside money by yourself, you can have it automated by asking the bank to do an automatic deduction of your set amount from your monthly pay check and have it placed in your savings account.
Moreover, make a close look at your monthly spending and find which areas you can improve of to safeguard your financial life. If you received extra money such as promotion, bonuses and so forth, you need to have a discipline of saving it for your emergency fund.
Where to Keep the Cash
The place where you will be putting your money should be where you can easily get it without hassles in case that you will need it for emergencies. Of course, emergencies are always in hurry so you should make sure that you can have it withdrawn 24/7. Do not tie it up with stocks which may decline in its value through time. Placing it at the money market or the savings account would be a better idea. Yet make sure that you check the minimum balance requirements and the interest rates.
By being able to save and being able to monitor your expenses, you can safeguard your financial life and free yourself from possible unmanaged debts.
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