Are you prepared in the case of unexpected expenses?
Building up your savings isn't easy but having a significant amount of money saved is extremely important, especially if an emergency hits. To make sure you're financially covered if you lose a job, get in a car accident or need to do a major home repair, it's a good idea to have between three to six months’ worth of household expenses saved as an ‘emergency fund’. If you haven’t already done so then it might be time you considered building up your emergency fund. If you are just starting your savings then approach it in the same way you would any other financial goal. Here are some steps you can follow to help you reach this goal.
Have a plan
Decide what you want to do in the long term and set short term spending and savings goals which will enable this to happen. Start off slowly and systematically work your way towards your target.
Assess your spending
Keep a track of your spending and challenge yourself to change the way you spend your money so you can achieve your short term savings goals. Little things like forgoing take-away coffees or lunching out can accumulate a significant amount over time.
Save first, spend later
Set up automatic transfers to save money as you receive it. Don’t wait to see if you have any money left over as invariably you won’t.
Keep this money in a separate account
This money is specifically for emergency or unexpected situations. Keeping it in a separate account identifies its purpose and will mean that you don’t spend it on something else.
Spending is easy and saving is hard. That's why getting a reward every once in a while is important to keep you going, If everything is going as planned, you should reward yourself every now and again by using a small but meaningful amount to purchase a night out or a night away. It will help you to sustain the momentum.
Best of luck reaching your goals!