When saving, it’s vital to consider personal circumstances as it will directly factor in the amounts held while ensuring that you cover everyday expenses without strain. However, to maintain a flexible account, set a realistic goal.
Avoid working with a figure where personal circumstances make it impossible to reach. With consistency, it’s possible to reach the goal monthly, maintaining a flexible account.
Savings automation will ensure that transfers are made to the savings account every payday or as planned out with the bank without making the transfers manually. Automation is best made to transfer on payday to avoid using the money reflected in the bank account that you just barely earned.
You do not want your cash to burn a hole in your pocket. Using the out of sight, out of mind concept, it will make it possible to live within your means while securing the emergency funds that you need to sustain yourself.
Use savings apps to help track the amount to save if you have everyday payments or inconsistencies in paychecks.
Increase the Fund
After some time of the same dedicated amount of funds from your paycheck to the savings account, it’s time to increase the funds with the increase in responsibility.
The funds recommended in an emergency fund should amount to 3-6 months of monthly expenses.
Increase the amount when job stability is attained or after a job promotion. If there are multiple income streams, the savings should reflect the increase in income.
However, when making a significant investment such as buying a house, place aside 10% of the initial purchase price in addition to the emergency funds in the first year for repairs.
The emergency fund will come in handy in emergencies like contracting an exterminator to control pests that may have intruded into your home. There are many other emergency expenses that might come up.
However, you can be prepared for these a little more by having an emergency fund that you are always adding to. After all, some emergency expenses are more expensive than others.
Your dog might need emergency surgery, or your child might have an accident that requires a doctor visit. The possibilities are endless, so be sure to have a hedge fund to support your finances so they do not topple over.
Calculate all monthly expenses and ensure that each is kept separate. With the separation clear, it will be easier to keep from dipping into the slush fund for everyday purchases.
When budgeting for the whole month, start planning for entertainment expenses factoring in all hobbies. Habits you seek to break should also have a smaller allocation.
One great way to track all your money, whether it is coming into your bank account or leaving it, is by using Google Sheets. You can also opt to use Microsoft Excel, which is great as well. Both of these programs are easy to get a hold of, but Google Sheets is free, and easier to use.
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So that might be the one to try out first. You can write down all your monthly expenses and see them all right in front of you, thereby increasing your ability to track them and stay organized. This is a great way to avoid any forgotten bills throughout each month.
All in all, consider ways to increase and maintain a flexible emergency account. Identify areas to spend less and temporary ways to reduce money consumption. Diversifying income purposefully for emergency funds will also aid in getting a bigger emergency fund faster.
Image Credit: how to maintain a flexible account by twenty20.com
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