Having an emergency fund can save you a lot of heart ache! Everyone has their rainy days and we all know that bad luck comes in three's. To prevent an unforeseen event from ruining your week, month or even year; save at least 3-6 months of living expenses in a liquid investment.
These funds are not to be used for holiday savings, birthday savings or any other event that is not considered an "emergency". A good place to save the money would be an online savings account, normally they pay a higher rate of interest than your regular saving account with your bank and the money isn't as easily accessible as you don't have a ATM card and normally a transfer from your saving account to your checking account takes a day or two.
Showing posts with label Emergency Fund. Show all posts
Showing posts with label Emergency Fund. Show all posts
Monday, February 18, 2008
Sunday, January 27, 2008
How much should I save?
Taking baby steps and being patient is the best philosophy for saving. If you are a beginner and haven't began saving we will start crawling until you pick enough momentum to begin walking and eventually break into a full stride.
Step 1: Establishing an Emergency Fund will be your first priority. Set up automatic transfers from your checking to your savings. Try to save 10% of your salary, if that's to much - save what you can and work your way up to 10%.
After you have established your emergency fund with 3-6 months of expenses, your next savings goal will be:
Step 2: Saving for Retirement. Set up automatic payroll deductions to transfer into your company's 401K or other retirement account. Transfer 15% of your household income into your retirement account to be invested. If 15% will break the budget then contribute AT LEAST enough to get your company's match (usually 6% of your gross salary).
Depending on your household: a college fund may also be a necessity
Step 4: Establishing a College Fund: there are various options for these funds, depending on the age of your child. Percentage of income to be saved will depend on the estimated cost of attendance and other factors. More details on college funds will be posted soon.
If you have completed steps 1-4: CONGRATS!
Personally I have a separate savings account for "other wants" such as buying furniture, new car, holiday & birthday fund or anything else that might require a large amount of cash.
Step 5: Establish a Special Savings account for other discretionary spending.
Step 1: Establishing an Emergency Fund will be your first priority. Set up automatic transfers from your checking to your savings. Try to save 10% of your salary, if that's to much - save what you can and work your way up to 10%.
After you have established your emergency fund with 3-6 months of expenses, your next savings goal will be:
Step 2: Saving for Retirement. Set up automatic payroll deductions to transfer into your company's 401K or other retirement account. Transfer 15% of your household income into your retirement account to be invested. If 15% will break the budget then contribute AT LEAST enough to get your company's match (usually 6% of your gross salary).
Depending on your household: a college fund may also be a necessity
Step 4: Establishing a College Fund: there are various options for these funds, depending on the age of your child. Percentage of income to be saved will depend on the estimated cost of attendance and other factors. More details on college funds will be posted soon.
If you have completed steps 1-4: CONGRATS!
Personally I have a separate savings account for "other wants" such as buying furniture, new car, holiday & birthday fund or anything else that might require a large amount of cash.
Step 5: Establish a Special Savings account for other discretionary spending.
Saturday, January 26, 2008
There is a way to make saving effortless....Automate it!
Remembering to save is one of the most difficult things to do as it is usually the last thing on your mind. We normally plan on saving whatever is left in the checking account after all bills, personal allowances and impulse purchases are complete. The only flaw with this plan is: THERE IS NEVER ANYTHING LEFT OVER!
There is a simple solution to this obstacle: Automate your savings plan.
You might have heard of this strategy, it is called paying yourself first. The premise behind it is: you don't worry about what will be left over at the end of the month because your savings allowance has been deducted from your paycheck or checking account before you realize the month is gone.
Paying yourself first is so effortless and simple because it takes all of the planning off of your mind and you don't realize the money is missing.
Use the steps below to automate your savings plan. You will feel truly blessed when an unforeseen event occurs and your savings that you might have forgotten you had is there to save the day!
Step 1: Decide how much you want to save weekly. Ten percent is a good place to start. You can always save more later.
Step 2: Find a reputable online bank that pays a good interest rate on savings account. I use Emigrant Direct(www.emigrantdirect.com) but there are a few other good choices out there. Just remember to check with the Better Business Bureau about each bank's reputation. (www.bbb.com)
Step 3: Set up your online savings account and link it to your regular checking account. To do this log in to your Emigrant Direct account and click on the links tap at the top of the page. Then click "add account," enter your bank account information and follow the instructions.
Step 4: Set your savings account to draft your savings amount from your checking account every payday by clicking on the "transfer money" link and setting your date for the next payday and then every seven days. You may even want to set it for a day before your payday so that it will come out the same day your put your paycheck in. The procedure typically takes until the day after to actually come out of your account
There is a simple solution to this obstacle: Automate your savings plan.
You might have heard of this strategy, it is called paying yourself first. The premise behind it is: you don't worry about what will be left over at the end of the month because your savings allowance has been deducted from your paycheck or checking account before you realize the month is gone.
Paying yourself first is so effortless and simple because it takes all of the planning off of your mind and you don't realize the money is missing.
Use the steps below to automate your savings plan. You will feel truly blessed when an unforeseen event occurs and your savings that you might have forgotten you had is there to save the day!
Step 1: Decide how much you want to save weekly. Ten percent is a good place to start. You can always save more later.
Step 2: Find a reputable online bank that pays a good interest rate on savings account. I use Emigrant Direct(www.emigrantdirect.com) but there are a few other good choices out there. Just remember to check with the Better Business Bureau about each bank's reputation. (www.bbb.com)
Step 3: Set up your online savings account and link it to your regular checking account. To do this log in to your Emigrant Direct account and click on the links tap at the top of the page. Then click "add account," enter your bank account information and follow the instructions.
Step 4: Set your savings account to draft your savings amount from your checking account every payday by clicking on the "transfer money" link and setting your date for the next payday and then every seven days. You may even want to set it for a day before your payday so that it will come out the same day your put your paycheck in. The procedure typically takes until the day after to actually come out of your account
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