Loanio

Have an emergency fund.

If you are concerned about the state of your finances, your job or if you would just like to have a safety net that will be there to catch you if something goes wrong, an emergency fund is a very powerful tool to have in your financial arsenal. Emergency funds can be used for just about anything and these are the proverbial “rainy day” funds that can help you stay afloat when the worst happens. Since we can’t control everything in life, it’s always nice to know that you do have other options to keep you financially solvent.

Setting up an emergency fund is actually quite easy and although it can take a few months to get to the point where you won’t have to worry, you’ll have the satisfaction of knowing that you’re saving ahead for your future. This makes it a lot easier to keep going and keep working on building up that emergency fund.

The average emergency fund should contain at least enough money to pay your expenses for three months. Ideally, it should be for six months to a year, but the key is to get started and worry about the actual amount later. Once you have your emergency account set up, adding to it is the easiest part.

So, you’ll need to sit down and calculate how much money you make a month, and how much you are spending. Use one month as your basis for the average amount of money you would need and you can go from there. The main use for an emergency fund is typically to cover you if you end up losing your job, so use this as your template for building up your emergency fund.

Once you have a better idea of how much needs to go into your emergency fund, it’s time to get started on where you will be keeping it. While burying it in the back yard is out of the question, it is important to keep your emergency fund in a place where it can be quickly accessed. A savings account with a debit card or checks that you can write is ideal in this situation since you’ll be able to quickly withdraw your funds if necessary and you won’t have to wait for business hours if you are in the midst of an emergency.

Your emergency fund should not be tied to your regular checking account or any other account. This can help cut down on the temptation to spend your rainy day money while it is still quite sunny out. Remember, whenever you are tempted to dip into that account, what could happen if you lost your job today. Would you have enough money to pay all of your bills, and keep your house and car? This is very good motivation if you are having a difficult time keeping your hands out of the till. Work towards a bigger goal with your emergency fund and don’t forget to keep adding to it to make it grow further.

Photo Credits: 1

Originally posted 2008-10-23 08:47:00. Republished by Blog Post Promoter

• 4 Tips for College Students Budgets /caption] If you are a college student, then your primary focus is probably set on your studies and trying to maintain your education so that you will be benefited in the future. Unfortunately, one of the things that you may not be putting enough consideration into is how you are......
• Great Budgeting Examples /caption] When you are looking at ways to implement a family or individual budget into your household, one of the most proactive steps that you can take is to look at great budgeting examples from other sources. Because everyone has unique financial and budgetary needs, there is no real one......
• When Disaster Strikes [/caption] As Hurricane Ike took aim for the Gulf Coast, the financial markets reacted much in the way that they were expected to. Gas prices jumped to $5 a gallon along the gulf coast, and many expected the price jump to go nationwide, particularly if the hurricane caused damage to......
• Tips for College Student Budgets /caption] Trying to make ends meet when you are in college is not an easy task. Your income is usually pretty limited and expenses can be high, even if you have a scholarship. If you’re trying to save money or just get by, there are some great tips for college......
• How Do I Plan For Retirement Every working man and woman is entitled to a retirement that is secure and comfortable. Saving and planning for retirement is not necessarily an easy process however because we are living longer and healthier lives in general, which means we need more money to survive retirement than ever before. If......

• how much emergency fund is enough? The term "emergency fund" is misleading.  Is a new tire for the car an emergency?  Is a new TV, when your last good one dies?  Most of us have a good idea what an emergency means when we consider the extreme case:  a sick child, a roof with a......
• Reluctance to Use Emergency Funds The first step in any good financial plan is to establish an emergency fund to handle life's emergencies and break the cycle of turning to debt. However, some people feel a reluctance to use the fund in an emergency and turn to credit cards to cash flow each bump in......
• How to Start Saving More Right Now For many of us, saving is something that we always plan to do, but never quite get around to it. The bottom line is, if you don’t have a savings account and a regular plan for putting money aside, you may regret it in the future, especially as you get......
• Five Painless Ways to Fund an Emergency Fund Ok, you’ve probably heard more times than you can count how important it is to have an emergency fund. You know that you need one, but the missing information is how you’re going to get one started. Sadly, it’s often the people who can’t afford an emergency fund who need......
• The 7-Day Turnaround, Day 2: Build an Emergency Fund, Quickly This is the second article in Frugal Dad's week-long series, The 7-Day Turnaround: One Week to Change Your Family's Financial Destiny. Each day brings a new step to implement and help you get control of your finances. Experts argure over the first step of a money makeover. However, anyone who......