The #1 Thing You’ll Regret Not Putting In Your Budget

Budgeting Process

Are you budgeting For Emergency Funds?

Emergency funds are considered to be a necessity as far as financial security is concerned, since it can provide you with financial resources that you can resort to and depend on when an emergency arises such as when you are sick and have the burden of paying huge medical bills, or unexpected home or major car repair.

Dave Ramsey, In his best-selling book, The Total Money Makeover, recommends having at least a $1,000 in emergency funds to start with and a goal of eventually beefing that up to 3 – 6 months living expenses.

Nobody likes to think about emergencies, but lets face it they are going to happen. That’s life. According to Dave Ramsey, emergencies are like the rain…

“Sooner or later it is going to rain…you can count on it…YOU NEED A FREAKIN UMBRELLA” umbrella

When you have no emergency fund, you can be obliged to acquire debt on your credit card that might take several years to repay with interest that would later cost so much more. (Trust me, I’ve learned this the hard way.)

However by putting an extra thirty to fifty dollars every month in an individual “emergency savings account” you can be secured with what emergency the future may bring. In doing this, it is recommended that you regard the emergency fund as an additional bill, to be punctually paid each month.

Yes, you can and should budget and allocate the extra money for emergency fund, as this is very significant when you refer to your “financial future”. Here, the goal is to create savings from budgeting your income; the emergency savings should ideally be equal to at least three months your living expenditures.

What’s important is that you should steadily put a certain amount of money aside, and only use it for real emergencies.”

Not like an investment, the success of your long-term savings funds does not really count on the amount of return or interests but on placing a fixed amount of money away consistently and steadily so as to have immediate access to it at all times.

In spite of your financial status, the initial step in the process of constructing an emergency fund is by knowing where your money is presently being consumed or spent.

When you recognizes and determine where your earnings are spent, then it will be easy for you to choose and make a decision on where to trim down expenses. In other words, budget.

Budgeting is putting or setting aside money for anticipated and unanticipated future use. It is here that you set up a goal to save. So set an emergency fund as your goal.

Checking, savings, money market accounts and “certificates of deposits”, are great places to keep one’s cash that might be needed on quick notice.

The amount saved from budgeting can either go to your savings goal, emergency fund or both. You could utilize the money saved from budgeting financial expenses by saving half of it to your savings account and half of it for emergencies. This way, you achieve your goals in savings and at the same time put in funds for emergency use. It’s your choice.

More Reading from around the web:

Get Rich Slowly: Why and How Do I Need to Save For Emergencies? 

Budgets Are Sexy: The “Sticky Note” Way of Budgeting

Budgets Are Sexy also has a great budgeting resource page full of all kinds of budgeting templates you can download. Check them out HERE

 

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