Expect the Unexpected: How to Budget for Emergencies
October 15, 2018
Even the most organized person can’t control everything. Unforeseen circumstances can throw a major wrench in your plans, and your budget, if you’re not prepared for them. Follow these steps to build an emergency fund that will carry you through tough financial times.
Assess your spending. An emergency savings fund will look a little different for everyone. It all depends on how much you spend per month. So before you do anything else, look at last month’s bank statement and see how much money goes out (for necessities, not extras) every month. Once you have this number, strive to save up enough money to cover these costs for anywhere from three to six months.
Figure out a realistic monthly budget. Now that you have a goal for your emergency fund, it’s time to figure out how to make it into a reality. Choose an amount to set aside each month from your paycheck that will go directly into your emergency fund, and make sure it’s a realistic amount.
Take out emergency savings first. This step is key: when you get paid, set aside the money for your emergency fund before you do anything else, even pay the bills. If you wait until the end of your pay period, chances are you’ll have spent the savings!
Add as much extra dough as possible. Whenever you get a bonus check or some unexpected extra income, toss it right into your emergency fund (or at least a portion of it). If you lose your job or suddenly have a huge medical bill to pay, it won’t hurt to have that extra cushion.
5 Easy Budget Tips to Set Aside $1,000 for Emergencies [EveryDollar]
How to Build an Emergency Budget (and Why You Need One) [Lifehacker]
Budgeting for Emergencies [Consumercredit.com]