Save Realistically And Build Financial Confidence
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How financially comfortable would you be if something tragic were to happen? If lose your job tomorrow, are you financially prepared to survive until you can find another? What would happen if you were in an auto accident, needed unexpected home repairs, or any of a hundred other misfortunes that occur every day? When calamity strikes, it is important to be financially prepared.

How much can you save?

In your mind you might be thinking you can put $400 aside each month. Even after doing a budget, many people think they can put aside more than they actually can. $400 a month is a nice goal. That would be $4800 a year. Not bad for someone living paycheck to paycheck. But, that is when reality hits. You’ve been living paycheck to paycheck, and now suddenly you think you can put aside that much money? Think again. The first thing to remember when setting a goal is to make sure you know you can achieve that goal. It is better to start small and increase your savings as you go, than it is to suddenly start putting aside money you regularly spend.

Say you make $3000 a month. If you put aside 5% for your emergency fund, that is about $150; an attainable goal. By staying with a 5% rule of thumb your savings will grow as you go through promotions, and raises.

Reality of what you need to save

Emergencies come in many ways, from the loss of your house, to natural disasters. Many government groups recommend an emergency preparedness checklist. This is a list of items you should have preassembled in case of disaster. Things such as flashlights, batteries, food, water, etc. One thing many people forget is money. In a time of disaster, money will come in handy. It is recommended you save at least six months of your monthly expenses. If you make $3000 a month and use 85% of that in expenses, you will need to save $15,300 to cover six months of expenses. If you put aside $150 per month it would take you 102 months to save toward that goal. That is 8.5 years. That’s a long time. Luckily, there are ways to save a little more.

Set Yourself up to Save

Below are some simple steps to help you save toward your goal:

• A little at a time- If you can’t afford to save as much as you want right now, then make an effort to save something. The trap people fall into is if they don’t have everything they want to put aside, they don’t put anything aside. Even $20 is better than nothing. Consistent saving builds a strong habit of saving.

• Self-discipline- Look at what you can remove from your daily expenses. Can you do coffee three times a day instead of seven? Try to cut out those small expenses that slowly eat away at your savings.

• Automate- Have your direct deposit automatically deposit into your savings so you don’t have to think about doing it yourself. The easier you can make it for you, the better off you’ll be.

• Spend a little for yourself- Put aside a little money for you to spend as you choose from every paycheck. By putting aside $15 for a movie, going to the zoo, or whatever you find fun will help you break away from a mundane life, and prevent you from unexpectedly overspending.

Preparing for your future

With these simple savings steps you can set yourself on the way to a good financial future. In addition to saving, a solid financial future comes from monitoring your credit score. You’ll want to order your credit scores, as there is almost nothing more important when it comes to money. Knowing your credit score and how to improve it will open you up for loans, mortgages, credit cards, and a multitude of other credit lines that can protect you in an emergency. Order your credit reports and monitor credit scores as frequently as once a month to stay aware of your current credit worthiness.

By setting up a savings account, being consistent with your emergency savings plan, and knowing your current credit worthiness you can better prepare yourself for those unexpected expenses.


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