Failing to prepare for unexpected emergencies can put you in a vulnerable position when you are faced with them. Yet even in a soft economy, it is possible to be prepared in case something were to suddenly go wrong. Continue reading to find out how to safeguard your household from unexpected emergencies.
It is recommended that people have six months living expenses saved up as a way to prepare. The best time to be saving money is now.
Everyone’s financial situation is different and the amount you need to survive for six months is not a one size fits all scenario. The best way to prepare yourself is to be educated about where your money goes. Regardless of your situation, is is a must to prepare yourself by creating a budget. You may be surprised at where you spend your money and may even find ways to cut back your spending. This gives you more room to add to your savings.
List every place that money goes to and assign it dollar amount. Once everything is written down, add everything up and multiply that number by six. This will give you a good estimate of how much you will need to satisfy six months living expenses. Once you know how much you need, you can begin saving money to put you ahead of the game in the event of an unexpected emergency.
It’s important to be aware of the fact that saving money for a possible event that may or may not happen can be very frustrating. Saving six months of living expenses varies a bit from building your nest egg or retirement savings because the goal is not necessarily to get a high return on your investment. Instead you are aiming for consistency.
Retirement account savings and 401K earnings are often deducted directly from your paycheck and are somewhat difficult to access. On the other hand, since the money that you save for living expenses is usually deposited into your savings account or checking account it can be tempting to use these funds for non-emergencies. It will take a substantial amount of discipline to ensure the amount that is needed is achieved.
Setting aside six months living expenses isn’t easy but it is something that needs to be done. Anyone who puts the time and energy into accomplishing this task, will find that when unexpected events occur, such as job loss or relocation, they are not as painful. Preparing for the future is a good thing because even if the unexpected never happens, knowing that you’re ready will give you peace of mind.
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