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Raymond James A column by James Kruzan

Emergency fund savings

December 28, 2011 - Have you assessed your emergency savings fund lately? Do you have six to 24 months of living expenses set aside in case an unforeseen emergency arises?

In these uncertain economic times, many find it difficult to routinely save for an emergency that has yet to happen. What starts out being a great savings plan idea usually dissipates while trying to make ends meet month to month.

Here are ideas to help you develop a routine and to build an emergency savings fund:

Be Honest About Your Finances. Take a long hard look at your financial health. Know what income you have coming in on a month to month basis and know what expenses you have going out on a month to month basis.

Identify Your Discretionary Cash Out Flow. Know where your everyday cash is going. How often do you go out to lunch during the work week? How often do you start the day with a latte from Starbucks?

Pay Yourself First. Make saving a priority. Think of your emergency fund savings account as a monthly bill that must be paid.

Use Cash. A cash-only spending plan can be extremely beneficial for a variety of reasons.

Some studies indicate people spend less when paying with cash. Discretionary spending changes for the better.

Don't Spend "Found" Money. Sometime in one's lifetime, money turns up unexpectedly. It's found in the pocket of a seldom worn coat or in a purse that is only used seasonally. When cash appears unexpectedly, don't spend it; deposit it to your emergency savings fund.

Direct Deposit. Set up your paycheck, tax return and/or other income as Direct Deposit to your savings account then transfer only what you need to your checking account in order to pay your monthly living expenses. Excess cash stays in savings and is not inadvertently spent.

Reduce Spending. Always look at ways to reduce spending. Not all expenses are fixed. There is always a way to reduce or even eliminate expense.

Any of these ideas can help create, preserve and build an emergency savings fund. What is important is that it gets started. The results down the road may be notable.

This material was prepared by Raymond James for use by James B. Kruzan, CFP, CRPC of Raymond James Financial Services, Inc. Member FINRA/SIPC.

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