Tag: you need a spending plan

You Need a Fund for Emergencies

An emergency fund or what some call a contingency fund allows you to stick to a spending plan without having to change and interrupt your budget to meet unexpected costs and expenses.  You can plan better and manage your finances knowing you can cover emergency expenses as they arise. 

Having emergency savings is extremely important in today’s economic environment.  It may be the most significant difference between those who manage to stay afloat and those who are sinking into financial debt.  Emergency savings of 3 to 6 months of expenses allows you to meet unexpected financial challenges such as:

•           Car repairs

•           Medical expenses

•           Home repairs

•           Other emergency expenses

Having an emergency fund also allows you to plan to spend all your money without worrying about taking care of emergencies that arise.  Below are more emergency fund tips. 

Emergency Funds give you Peace of Mind

The emergency fund not only allows you to cover these expenses, but it gives you the peace of mind that you are prepared for financial emergencies. 

Not having an emergency savings fund is a reason many individuals borrow money at high interest-rates through alternative and predatory lenders.

An emergency fund or what some call a contingency fund allows you to stick to a spending plan without having to change and interrupt your budget to meet unexpected costs and expenses.  You can plan better and manage your finances knowing you can cover emergency expenses as they arise. 

Keep Emergency Funds Where you can get to Them

You will want to keep your emergency savings in an account that you will have ease in the ability to access as needed.  This is called liquidity or the funds being liquid.

 How easy is it for you to get access to the money when you need them? 

It is best to keep emergency savings in a bank or credit union savings account so I can get to it when I need it.  These types of accounts offer easier access to your money than certificates of deposit, U.S. Savings Bonds, or mutual funds.  Keeping your emergency fund separate from checking accounts makes it much less likely that you will use these savings to pay for everyday, non-emergency expenses.

Get the Family Involved in Saving for the Emergency Fund

You may think that it is not so easy to save $500 to $1000 for emergencies.  One way to make it easier is to get the entire family involved in building the emergency fund.  It may be easier if you involve your whole family in meeting the challenge.  Explain the importance of emergency savings to your family and get them to help by cutting expenses on the power, food, entertainment, and more.

Make your emergency savings fund your family financial goal and plan how the family will meet the goal.  Keep the family updated and when you meet the goal be sure to celebrate maybe with a family fun night. 

Having emergency savings is essential in today’s current economic climate.  Having emergency savings will give you peace of mind about your finances.  Set goals and celebrate when you meet the emergency savings goal.  You need an emergency fund, and with some work and a plan, you can have an emergency fund for emergency expenses and peace of mind over your finances.

Achieving Financial Success

To some, financial success is spending less than they make.  This is a key to any financial plan.  The alternative is spending more than you make is a recipe for disaster.  Spending less than you make will allow for savings so that you can purchase assets.  

Financial success is attainable for everyone because it means different things to different people.  Your thought or views on financial success are probably different than mine and vice versa. 

Financial success for one may be to provide an inheritance to his children, and another person may see the vacation house on the lake as financial success.  However, you determine financial success, below are some tips or foundational tools to help you achieve your view of financial success.

Have a Plan

Get organized and develop a plan to get you to where you want to go.  In doing that, determine what your financial situation is.  Often, you can know where you are going until you know where you are.  So where are you?  What is your income?  Who do you owe, how much do you owe, and when is the payment due?  These questions are the types of information you will need to know.   

Once you know where you are, you can develop a plan to develop short-term and long-term goals and ways to meet them. 

Spend Less

To some, financial success is spending less than they make.  This is a key to any financial plan.  The alternative is spending more than you make is a recipe for disaster.  Spending less than you make will allow for savings so that you can purchase assets.  

And it is assets that will help you build your wealth and financial success.

Prepare for Expected and Unexpected Events

Expected events would include things like retirement, holidays, and kid’s college.  How will you plan for these events?  How much will you need for college or retirement?  Prepare for these events to be successful for you and your family.          

Unexpected events include car repairs, a job loss, or maybe unexpected medical expenses.  How will you handle these events?  An emergency fund of six to twelve months of expenses is a good place to start and could be seen by some as a financial success. 

Preparing for expected and unexpected events will save a lot of headaches later. 

A Healthy Credit Report

Many people see a healthy credit report as financial success.  To keep your credit report healthy, you need to do two things.  First, pay your bills on time. 

Thirty-five percent of your credit score is based on how well you pay your bills on time. 

The second thing you need to do is get a free copy of your credit report at annualcreditreport.com.  Getting a copy of your free credit report, and looking over it, may alert you to possible identity fraud.    

Understanding Taxes

Many people do not take advantage of tax breaks that are available to them.  For example, the Internal Revenue Service conducts a program called VITA.  VITA stands for Volunteer Income Tax Assistance.  Volunteers are trained to do taxes for free for low and limited-income individuals and families. 

Additionally, credits such as the earned income tax credit, education credits, and retirement saving contributions, can increase your income and help you reach your financial goals.         

Give Back

Money is used to do three things.  That is, spend or buy things, saving and investing, and giving.  

So, to complete your success, give back. 

Once you achieve financial success, give back to the local elementary school, food bank, or United Way.  Give back to the community in some way.  For me, giving in a much greater way than I am currently able, would be the ultimate success. 

What constitutes success for you.  Comment below, I would love to hear from you.