How to – Save for rainy days
Make savings part of your monthly budget
So, you want to save for rainy days. If you wait to put money aside for when you consistently have enough of a cash cushion available at the end of the month, you’ll never have money to put aside! Instead, make monthly savings into your budget now.
Keep your savings out of your checking account
If you see you have money in your checking account, you will spend it. The best way to building up savings starts with opening a separate savings account. Therefore, it’s less possible to accidentally spend your holiday money on another things.
Open a savings account at a different bank than where you have your checking account
If you keep both your accounts at the same bank, it’s easy to transfer money from your savings to your checking. Way too easy. Try avoiding the problem.
Direct deposit is (almost) magic
Because it makes you feel like the money you shuttle to your savings every month appears out of thin air even though you know full well it comes from your pay check. If the money you want toward savings never lands in your checking account, you probably won’t miss it.
There are 5 types of financial emergencies
A wedding isn’t one of them. Only dip into your emergency savings account if you’ve lost your job or you have a medical emergency. If your car breaks down or you have emergency home expenses (like a leaky roof), or perhaps you need to travel to a funeral. Otherwise, if you can’t afford it, don’t spend it.
You can have too much savings
It’s rare, but possible. If you have more than six months’ savings in your emergency account and you have enough put away for your short-term financial goals, then start thinking about investing.
Until next time.
The MoneyShop Team
This article has been prepared for information purposes only and it does not constitute legal, financial, or medical advice. The publication, journalist, and companies or individuals providing commentary cannot be held liable in any way. Readers are advised to seek legal, financial, or medical advice where appropriate.