Maintaining a healthy savings account in the bank is a vital part of being a financially responsible adult. Believe it or not, recent studies indicate that nearly half of Americans do not have the money necessary to pay for an unexpected $1000 expense.
If you count yourself among those, then you need to educate yourself on the importance of building a Rainy Day fund. Many people refer to these as emergency funds. Regardless of the name you use, you should store some money easily accessible, in case of the unthinkable. You never know when it might come in handy.
Things to Know About Emergency Funds for Personal Finance
Luckily, all you need to do to create a Rainy Day fund is to change a few small habits in your daily life. By changing a few critical decisions, you will effortlessly accumulate unspent money. This money can then go into a separate savings account, meant only for emergencies.
Cut Down On Monthly Expenses
One of the easiest ways to cut down on your monthly expenses is to examine what you are paying each month. The most common monthly expenses are rent, electricity, gas, water, internet and food expenses. Other than housing, your food and utility bills are the more costly expenses. Start with your utility provider. For example check out your current electric rates and go to their website to see how much you have spent on your utilities in the previous month. If it is more than you believe you should spend, start looking at ways to cut down on your excessive energy use.
Monitor Your Bank Account for Rogue Subscription Costs
You may or may not be surprised by the amount you spend each month on subscription services.
Technology has made it incredibly easy for us to sign up for these. They are far more accessible than ever. Unfortunately, many of these subscriptions only cost a couple of dollars at a time. However, over a year, they quickly add up. This is true, especially if you have multiple subscription services.
Review your bank statements at the end of each month. If you see any rouge subscriptions, track them down and cancel them. So you do not continue getting charged.
Make Coffee At Home
This is more of an expression than anything. It does not necessarily need to be coffee you are making at home. The point is pretty straightforward. One of the biggest expenses that anyone will have will always be food. It is one thing that everyone has in common. Choosing to cook or prepare your meals, beverages, and snacks at home is an easy way to adopt a healthier diet while also saving money. Both your wallet and your waistline will thank you if you stick with this one.
Why Do You Need An Emergency Fund?
Do you need to drive to go to work every day? If you did not go to work, would you still pay for your mortgage or rent at the end of the month?If your vehicle racks or crashes in any way, will you afford the repairs comfortably?
This is just one series of questions with self-explanatory answers. Series of similar questions illustrate the importance of having money set aside. It helps in case something terrible happens. It is always better to have it, not need it than to need it, and not have it.
Creating a rainy day fund takes a lot of effort when you first start. Yet, the momentum quickly builds once you get going. Do not be afraid of any initial reoccupation or hesitation you have.It is a normal response when you are trying out something you have never done before. You will be just fine as long as you follow the tips above.