Saving money isn’t easy. A great deal of the media we’re exposed to is working hard to let us know about all of the lovely things we should be buying. However, with some simple benchmarks in front of you, you can put together the funds to see you and your family through a crisis.
Rainy Day Fund
A rainy day fund is the money you can access when the washing machine quits or your car breaks down. Building it will take time, especially if money is tight. According to MyEva, a simple way to do this is to set up a separate account that gets funded automatically from your regular pay. If possible, set up an online bank account that gets a better rate of interest than you’ll find at a brick-and-mortar bank. Ignore this account until you need it or until you hit your savings target. Then you can start your emergency fund.
Many experts recommend basing your emergency fund around your budget. However, if you haven’t started a budget, you may actually put off starting your emergency fund, and this is a poor choice. Instead, start stashing away housing payments. If your rent is $1500, work to put away 6 months of rent payments. When your online bank account hits your rainy day fund target, such as one rent payment, set up another account with that bank and start funding it. If the money is invisible to you, it can just pile up until you have to access it.
Long-term savings can be hard to focus on if you’re young or if money is very tight. However, your golden years may turn to tin if you don’t start saving early, particularly if you’re a small business owner or a sole practitioner. In addition to getting the right insurance, including both long- and short-term disability, you will need retirement savings. Look for an insurance agent who is also a sole practitioner and do your best to put together an insurance package that provides health insurance and savings for you and your family in case of an emergency. According to Pothitakis Law Firm, in a situation where your company is going out of business, short-term disability may not reliably carry you through recovery. These policies are less expensive when you’re young and healthy, so start looking as early as possible.
Building savings takes discipline but is fully worth the work. If you can get to a place in life where you owe nothing to anyone, you have reached a place of freedom that few achieve. Start now and keep going.
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