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Simple and easy step by step emergency savings plan.
If you have read or heard about Dave Ramsey or any other financial speaker you have heard about the logical and financial benefits of an emergency savings plan.
Some may call it a rainy day fund. No matter what you call it, it is a set amount of money set aside for emergencies.
Examples of rainy day emergencies.
That new pair of shoes you saw in the store window or that new black dress aren’t exactly rainy day emergencies.
What I am referring to are real emergencies where you need cash fast. The radiator goes in your vehicle or your child gets sick or your car tire blows. These are unplanned emergencies that need to be dealt with and taken care of immediately.
Having an emergency fund.
Once you have an emergency fund set up you can pay for these type of emergencies right away without going further into debt or stressing about them.
I had to use a portion of my emergency fund this past summer. My radiator on my truck went on the hottest day of the year – go figure. But I had the money set aside for this type of situation. And honestly it was a big stress relief to have that money there when I needed it. Car full of kids and groceries and a broken radiator equals stressed Mom.
Setting up an emergency fund.
Setting up an emergency savings plan isn’t as hard as you think. You do need to set it up somewhere you can access it. So don’t put the money in a locked savings account or in a jar in the cupboard. You need to have access to this money in an emergency from where ever you are.
I suggest you set up a savings account or checking account at your local bank and link it to your debit card with the full understanding that this account is only for emergencies.
Step by step setting up your emergency savings plan:
- Open your savings account at your local bank
- Set an amount you want to save for emergencies such as $1000
- Start saving a little bit each week till you reach your goal
Saving money for your emergency fund.
Now that you have your emergency fund account all set up and you have set an amount that you think will cover your possible emergencies. How do you save up that amount?
You save it step by step. Start small and take any extra money you have and put it in that account. Next you start saving small amounts from every paycheck to add up to your set amount. You could save $60 this paycheck or $100 next paycheck. Make a plan that works for you. If you need a printout to help you save you can grab one here.
Start making extra money for your emergency fund.
If you can’t save the extra money you need for your emergency fund that is fine. You have other options. You can start making money to fill that emergency fund.
What can you sell to make some money? What aren’t you using anymore? Believe it or not, I am sure you have something you could sell to start off your emergency fund. Any old books or games? Old or unwanted furniture or tools?
Think about it what could you do to save up or work to make $1000? Set your goal, make a plan and start saving.
Once you have your emergency fund set up full of cash what do you do?
You leave it, walk away, don’t think about it. Some day you will needed and your job is to make sure it is there when you do.
You don’t have to stop there. If your side hustle or your saving plan is working and you aren’t minding the frugality or extra work. Start routing the extra money towards your debt or your goals.
Do you have debt that needs to be paid off start sending the extra funds you are saving in the debt reduction direction.
Or do you have a big goal you want to save for? Why not save some of your hard earned money and start saving for it. Dream big.
Are you looking to save money? Checkout these money saving resources:
Are you looking to get your finances under control and learn how to budget? Another great resource for budgeting and learning all the ins and outs of personal finance is The Total Money Makeover. This book changed our personal finances for the better and is a must read.
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Have an amazing day,
Saving & Simplicity