What is emergency fund?
How much should emergency fund be?
How to start building an emergency fund?
Sometimes in life the unexpected do happen and you need to be prepared when such things happen. Financial emergencies come any time when you least expect them. Building an emergency fund will help you when you are in need money. Having an emergency fund will help you to stay out of debt. You will avoid borrowing from friends of applying for a credit card or loan. The best you can do is to prepare for emergencies by starting to saving an emergency fund as soon as you can if you have not have already started.
What is an emergency fund?
An emergency fund is money that you put aside and use only in case of emergency.It is not to be used to buy a new car or those nice shoes you saw when you where in the town centre. It is designed for emergencies such as when you loose your job.
How much should emergency funding be?
Saving experts agree that the best reserves are between three and six months worth of your monthly. The most common reason for the need of an emergency fund is due to a sudden loss of income.
How to start building up an emergency fund?
Starting to build up an emergency fund of 3 to 6 times of your monthly salary can be difficult but once you have a strategy you can easily achive your goal. To achive this start saving slowly as you progress you can increase the amount you save. The easiest way to build an emergency fund is to put away a small amount of money each week or each month, where possible. This will eventually built up, before you know it you will have reached you goal.
The most difficult aspect of having an emergency fund is the temptation to take the money when maybe it is not required. If you can withstand the temptation of taking the money into your reserve funds it is highly likely that it will grow more for the future ahead.
Set up a mothly direct debit or standing order
Work out how much you can put aside and make it priority to save your emergency funds. Setting up a direct debit or standing order is one way that can help you achive your goal.
Achieving your goal
Everyone can achive their saving goal this by clearly monitoring where they put their money. You can start by using ourFREE Copy of Daily Saving Plan which will guide on how you can start saving in evey possible way.