Emergency funds are a necessity for anyone who desires financial security. Not only can it provide you with financial resources that you can resort to and depend on in times of need, it is a big weight off of your shoulders when it comes to wondering what you'll do if Jimmy's teeth don't come in right or Sarah falls and hurts her leg. What if your car breaks down? Will you just rack up more debt? Debt might take years to pay off, and it will only cost more in the long run due to high interest rates.
However, all of that unnecessary stress can be avoided by depositing an extra $30-$50 a month into an individual emergency savings account. When doing this, it's best to think of the emergency account as an additional monthly bill, to ensure that you're actually depositing money regularly. The emergency savings fund would ideally be at least three months of your regular living costs, in case you lose your job or have to take time off due to any number of factors.
But what's most important about your emergency fund is that you steadily add to it, and only take money out in case of actual emergencies. Unlike investments, the success of your long-term savings fund doesn't count on return or interest, but rather on placing a fixed amount away steadily and consistently so as to have immediate access to it whenever the need arises.
Despite what your financial status may be, the first step to the construction of an emergency fund is knowing where your money is currently being spent. Once you've set out and analyzed your budget, it's easier to consider cutbacks or excess savings and trim down expenses.
Emergency funds can be stored in checking or savings accounts, money market accounts, or certificates of deposit for quick access, but you should be sure that you aren't combining your emergency funds with any other savings you may have, so the two don't blur together. You don't want to risk forgetting which funds should be set aside and accidentally spend them!
Saturday, March 27, 2010
Budgeting Tools That Actually Work
Getting the greatest return on your income and putting aside some money into your savings can seem a daunting task for some. But I have a secret for you: budgeting doesn't have to be hard.
There are hundreds of budgeting programs available on the market today for every day use. These money-managing programs will provide you with the basic functions of entering your cash inflow and outflow, and categories of money-spending. Good programs will even present you with an analysis of your spending behaviors. Getting even more technological, some can track when your bills are due and if you've paid them and, if you really got a good program, offer you a tax draft that will ensure that you wont miss out on any dues or deductibles when it gets down to crunch time.
Computer software isn't the only budgeting tools you can utilize, however. Coupons are an amazing money-saving tool that too many people overlook. Almost every store and magazine in the country have coupons available to you to earn you discounts on products that you were probably going to buy anyway. Generally, people don't get too excited about saving $1, but look at it this way: the average American family of 4 spends roughly $600 a month on groceries. Assuming they go shopping once a week and use 2 $1-off coupons per trip, that's a savings of over $100. It may not seem like much, but $100 can get you that haircut you've been putting off. Heck, you could even through in a few highlights!
Lists are another important budgeting tool. Whether you keep it on a piece of paper, your computer, or your PDA, lists will help you keep focused on what you set out to buy and keep you from drifting off to other unnecessary purchases. Prior to making your regular grocery trip, write down the weeks menu and figure out from there what groceries you need to make that happen. Next, add on various other household items that you need or will need before the week is through. Armed with these lists, you are now able to go to the grocery store to get exactly what you wanted, without getting distracted by all the fancy aisle displays.
A filing system is one of the best budgeting tools your home can have. With simple file folders, you can track your bills, receipts, bank documents, and whatever other financial documents you might need with barely a thought. By ordering these by type and date, it makes tax time that much easier.
The most effective budgeting tools are those that address your specific needs. Sometimes that means you shouldn't settle for just one, and sometimes that means you should shop around. Don't stop looking for the best budgeting tool until you find one that does exactly what you want it to do and more.
There are hundreds of budgeting programs available on the market today for every day use. These money-managing programs will provide you with the basic functions of entering your cash inflow and outflow, and categories of money-spending. Good programs will even present you with an analysis of your spending behaviors. Getting even more technological, some can track when your bills are due and if you've paid them and, if you really got a good program, offer you a tax draft that will ensure that you wont miss out on any dues or deductibles when it gets down to crunch time.
Computer software isn't the only budgeting tools you can utilize, however. Coupons are an amazing money-saving tool that too many people overlook. Almost every store and magazine in the country have coupons available to you to earn you discounts on products that you were probably going to buy anyway. Generally, people don't get too excited about saving $1, but look at it this way: the average American family of 4 spends roughly $600 a month on groceries. Assuming they go shopping once a week and use 2 $1-off coupons per trip, that's a savings of over $100. It may not seem like much, but $100 can get you that haircut you've been putting off. Heck, you could even through in a few highlights!
Lists are another important budgeting tool. Whether you keep it on a piece of paper, your computer, or your PDA, lists will help you keep focused on what you set out to buy and keep you from drifting off to other unnecessary purchases. Prior to making your regular grocery trip, write down the weeks menu and figure out from there what groceries you need to make that happen. Next, add on various other household items that you need or will need before the week is through. Armed with these lists, you are now able to go to the grocery store to get exactly what you wanted, without getting distracted by all the fancy aisle displays.
A filing system is one of the best budgeting tools your home can have. With simple file folders, you can track your bills, receipts, bank documents, and whatever other financial documents you might need with barely a thought. By ordering these by type and date, it makes tax time that much easier.
The most effective budgeting tools are those that address your specific needs. Sometimes that means you shouldn't settle for just one, and sometimes that means you should shop around. Don't stop looking for the best budgeting tool until you find one that does exactly what you want it to do and more.
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