How Much Money Should I Put In Savings For An Emergency
So you ask about how much money you should save for an emergency? Once upon a time throughout your life, maybe you have experienced bad events or unpleasant.
The incident could be a serious illness, vehicle collisions, accidents at home, your stuff is stolen, fire, and so on.
You also realize you have to spend huge amounts of money to overcome these events, yes, the events may appear suddenly as a part of the risk of life.
Until one day you actually experience it, and of course, I do not expect you to experience it.
You will realize how important you save money in situations like these, which may occur at any time in your life. Most people will use their credit card without thinking of the effect.
They hope to resolve the issue quickly with a credit card, but it turned out to create a new problem in their lives.
Like a snowball, which will always bring trouble growing large.
Be aware of this case, although it is often underestimated by most people, the difficulties that will be brought about is real.
Pay attention to your life today, whether you have a family? Say you have a child, then it becomes a serious consideration when you should set aside some of your money for emergencies.
Another example is when someone lives with a particular disease, then he certainly should have saved more for emergencies compared with healthy people.
Indeed, you might think that having savings is not that easy.
When a lot of financial rules, economic conditions are not good in your country, the prices of basic necessities are increasing, high taxes, so the having money savings is difficult.
Especially when you realize that your salary is only enough to support your simple life.
Strategies To Save Money For An Emergency
It can be complicated, but not impossible. The amount you should have in your emergency fund may vary, so we suggest you read this note to determine the amount of money that should be there.
So, here are some strategies for you to apply the most appropriate according to your lifestyle:
- Establish a fixed monthly percentage: If you have your finances under control, you will find it much easier to “get a monthly fee” so that you can grow this emergency fund.There is no set limit but, depending on your budget and your accounts, it can be between 1% and 5% of your salary. Add it as an additional field in your budget.
- Use an automatic transfer: Especially if you want to have this money in a particular savings account, you can set that, to just receive your fortnight, between $ 10,000 and $ 20,000 going directly to that account.For this, it is important to take into account how much you expect to have in this fund, and that, divide it between 6 or 12 months, depending on how long it takes to build this fund.
- Open a specific bank account for the savings fund. Having the money saved will reduce the temptation to spend it on other things and at the same time, your savings will be earning interest.
- If an emergency occurred and you have to use part or all of the fund, it is advisable to increase the percentage which is you save each month. Even if it is a minimal increase, it will take less time to recover what you had.
- If your income increases, then you also have to increase the percentage allocated to the emergency fund. The efforts made by you from month to month will be rewarded with peace of mind to overcome the crisis without financial setbacks.
- You can have two emergency funds, one for small or minor situations and another for major emergencies.The first emergency funds could be used to repair damaged equipment or for the treatment of colds or other minor situation.The second would be perfect to solve a prolonged illness, greater damage to the car or damage caused by natural disasters.
- An emergency fund is an alternative among many preventive options that exist. Consider combining the emergency fund with other options, such as medical or housing insurance.
The creation of an emergency fund is simple and should always be adapted to your income.
It requires commitment and discipline because it must protect the money and not spend it for other purposes. Remember that the main beneficiary will be you and yours.
The emergency fund should be seen as an investment rather heritage and be covered in personal finance, that money should not be spent, but must be kept so that it is available at any time. It is very important to respect it.