Your Family Finances Are In Jeopardy Without A Savings Plan |
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| By: Susanne Myers | ||||
You are not alone. If your budget looks like most household budgets, you don't have any money left after payday. If you have a few pennies left, you'll buy some groceries with it or pay a little extra on a bill. Why would you even consider putting those extra pennies away in a savings account? Why shouldn't you pay a little extra toward a bill or buy something you need with the extra money? You're also wondering how, even if you wanted to, you would be able to stick a few dollars aside. Well, there are some good reasons why and some hard decisions to make as to how. 1) Why should our family have an emergency savings account? It's great when your budget covers all your expenses and your life goes as planned. Unfortunately, life rarely moves along as smoothly as planned. Your child gets sick and you are looking at a $1000 medical bill strung out in installments at 20% interest. Or your car breaks down and now you have no way to get to work unless you can come up with $800 for repairs. Either way, your budget has just hit the skids. You'll find it necessary to start missing other payments and borrowing from high interest credit cards to make ends meet. This starts the ever downward spiral of late fees and overage charges. Now, your emergency is destroying your budget and all your best laid plans are for naught. One emergency expenditure can be devastating to your family's well-being. 2) How do I save money for emergencies? The only real way to ensure that you develop a good safety net is by putting saving at the top of your list. When you start with a flat percentage of your net pay, you will be more likely to save than if you see what's left after everything is budgeted. Your fixed expenses, like your mortgage and utilities, should come next. Then your flexible expenses like groceries, clothing, and the like. You'll need to go over this a few times, but try to stick to the savings amount when making adjustments. Try to focus on cutting the flexible expenses first. This will be difficult at first, but the relief you feel as you watch your savings grow is worth all the sacrifices you make at the grocery or clothing store. When you can pay for an emergency expenditure with cash, and keep your budget intact, you won't even miss that drive-thru lunch or latte. Many families can barely pay their bills and feed their families. The thought of skimming money off the top of their take-home pay just to stick in a savings account is impossible. For these families, there is only one solution. You need to take a hard look at your current lifestyle, including the amount of money you are making. Tough decisions have to be made, some which might not too pleasant. However, when an emergency wipes out what's left of your budget, there is nothing pleasant about that, either. There are two options at this point. Earn more money and spend less money. What in your lifestyle needs to change in order to spend less money? Do you need to increase your income so your family is protected? These are hard decisions to make sometimes, but crucial to your family's welfare. Look carefully, and critically, at your lifestyle. Have you driven through a fast food place? Have you bought a designer coffee lately? Are you still shopping for clothes at the mall? If these old habits are still a part of your life, you need to re-examine your priorities and make some changes. Your new life will include consignment shops, and thrift and cut-rate stores. You'll take your kids to the library instead of the book stores. You'll recycle your clothes from season to season instead of buying new. You'll cook at home and cook frugally, using beans once or twice a week instead of meat. You will turn a frugal eye to everything you buy. Perhaps you need to earn more money. This is a difficult option because many families are already working two jobs. Is there an opportunity that you have over-looked? Networking with other people in your community may lead you somewhere that you hadn't known was possible. Is there something you can do at home after work that would allow you to bring in some needed cash? No one said this was going to be easy, but you have to consider your financial situation and make an effort to help your family survive. If your family budget is nothing more than an outline of money in and money out, then your budget is not complete. Your budget is a tool to establish financial security, not just a way to make sure the bills get paid on time. It's true that you may need to sacrifice some things you've become attached to. You will need to re-assess your old habits and establish some new, frugal habits. Your family's well-being depends on having the means to handle any emergency that occurs. Once you and your family see your emergency fund start growing, I guarantee you'll start to relax and look forward to a great future. |
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| Article Source: http://yourfinance.co.za | ||||
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