Emergency Savings Series - Part 3/3 (3 minute read))

Reduce Stress - 4 Easy Steps to  Create an Emergency Savings 

Everyone knows that an emergency fund can help cover those unexpected medical, car, home or personal issues.  How much less stress would you carry, if you had money to help cover any surprise emergency?

Follow these steps to help you reach your emergency savings goals:

Follow these steps to help you reach your emergency savings and debt-reduction goals:

1. Decide how much you’ll save, breaking your goal into pieces for short-term and long-term savings. Also determine what approach you’re most comfortable with when it comes to prioritizing saving goals with debt-reduction goals.
2. With your goal in mind and priorities in place, decide where you’re going to keep your money. Keep in mind, emergency funds need to remain fairly accessible.
• A savings account, money market account or short-term certificates of deposit generally make good sense. Any one of these accounts will give you the liquidity you need, while still earning some interest.

• ·        Keeping emergency savings floating in a checking account or commingled with other savings dollars is not recommended. Emergency savings are for emergencies only and are best kept in a separate account only for this purpose.

3.       Find money to put toward savings. This can be accomplished by doing one or more of the following to help you put money into savings and reduce debt:

• Find money within your budget.
• Earn additional dollars.
• Reduce spending in some areas.

If you find your budget is really tight, don’t be discouraged. Even $10 or $20 a month is progress toward your goal and will add up over time.

Also keep in mind: Savings can get a kick-start with a tax return, a bonus check, a rummage sale or a temporary part-time job. Ask yourself what you could do for a few months to earn some extra money to get that short-term emergency savings in place.

4.       Make savings automatic by setting up scheduled automatic payments to your savings account. You could set up:

•      A direct deposit from your paycheck. Your employer can let you know how to do this.
•      An automatic transfer from your checking to your savings account. Check out your bank or credit union website to set this up.

A majority of us don’t miss the money that’s directed this way. Out of sight, out of mind, and into the savings account. Revisit the amount after three or six months. If you don’t miss $50 a month, would you miss $75?

Automating your savings greatly increases your ability to reach your goal.

Source: Frugalliving.about.com/od/moneymanagement/ht/Emergency_Fund.htm