By Edwin Shackleford
Emergency funds are considered to be a necessity as far as
financial security is concerned, since it can provide one with
financial resources that one can resort to and depend on when an
emergency arises such that when one is sick and have the burden
of paying huge medical bills, or unexpected home or major car
When one has no emergency fund, one can be obliged to acquire
debt on your credit card that might take several years to repay
with interest that would later cost so much more.
However by putting an extra thirty to fifty dollars every month
in an individual “emergency savings account” one can be secured
with what emergency the future may bring. In doing this, it is
recommended that one regards the emergency fund as an additional
bill, to be punctually paid each month.
Yes, one can and should budget and allocate the extra money for
emergency fund, as this is very significant when one refers to
his “financial future”. Here, the goal is to create savings from
budgeting your income; the emergency savings should ideally be
equal to at least three months your living expenditures.
What's important is that you should steadily put a certain
amount of money aside, and only use it for real emergencies.
Not like an investment, the success of one’s long-term savings
funds does not really count on the amount of return or interests
but on placing a fixed amount of money away constantly and
steadily so to have immediate access to it at all times.
In spite of one’s financial status, the initial step in the
process of constructing an emergency fund is by knowing where
your money is presently being consumed or spent.
When one recognizes and determines where one’s earnings are
spent, then it will be easy for one to choose and make a
decision where to trim down expenses. In other words, budget.
Budgeting is putting or setting aside money for anticipated and
unanticipated future use. It is here that one sets up a goal so
as to save. So set an emergency fund as your goal.
Checking, savings, money market accounts and “certificates of
deposits”, are great places to keep one’s cash that might be
needed on quick notice.
The amount saved from budgeting can either go to your savings
goal, emergency fund or both. One could utilize the money saved
from budgeting financial expenses by saving half of it to your
savings account and half of it for emergencies. This way, you
achieve your goals in savings and at the same time put in funds
for emergency use. It’s your choice.
About the Author: Visit Edwins site for more free tips on
setting up a family budget.