5- Steps to establish an emergency fund
It is the need of the time for you to know regarding your financial position and assets to meet your sudden needs. You must always keep aside some of your disposal income instead of spending all as security so that whenever undergo some sudden need you should have some amount to meet that requirement instead of being getting indebted. Because if you will not maintain your saving account then it would be difficult to maintain your financial requirements in terms of a sudden illness or sometimes you come up with the situation of unemployment and losing of job.
Instead of spending on absurdities you should have such amount of money in your saving account that whenever you face financial problem you yourself would be able to meet your 3 to 6 months need with that money unless could be able to maintain some new job or monetary incoming cycle.
Instead of keeping at home it should be kept in such form that one could get high interest while keeping that amount save such as either should keep it in some profitable account or should reinvest it in such form that can get high value from. But whatever the practice is, you should be in position to acquire that money all of a sudden whenever you needed.
Instead of waiting for the big apple and an enormous jump start with minor savings that would be beneficial coz you may have heard that a bird in hand is better than two in bush so regardless of having nothing in hand start to save nominal amount each month.
The method to start saving for emergency fund
can be such that check and analyze your monthly expenditure. Then among that check the fix and variable expenses, calculate those and calculate your income. Then see how much could you save from this,that is the extra expense that you are making and could avoid that. Start keeping aside with small amount as saving for 1 month and reach the big goal of making saving for the expenditure of 6 months. Once you are able to maintain your emergency fund and thinking yourself sound and safe start with the work of making some long term objectives and setting some milestone so that you can never be able to think your financial position disturb and always be capable to meet all your living needs instead of getting indebted whenever a sudden need arises.
How this need for emergency fund EMERGIES
The reply to this can be that there is always need for keeping some monetary value aside for considering yourself safe but when in 2008 most of the people got unemployed and were jobless for such a large span of time that their savings also ended then economy developers start focusing people attention towards the development of such accounts and deposits.
Because once you are in job or have some source of income there is always a room for you to save at least a penny out of your income that would accumulate one day into a bigger amount. For emergency fund the requirement is to save for 3 to 6 months outlays and according to some financial institutions you have to manage your cost of 3 months when:
You are all alone and don’t have to feed a family rather you also have secondary earnings. You have some alternative also available to make money.
Or the second reason for making saving of 3 months instead of 6 is that you and your partner both works in terms when you are married and both should have reasonable income.
Even if married and only you works, but have some alternative proceeds coming to meet your family needs.Otherwise have to manage 6 monthly expenditure savings.
Tools to establish emergency funds
Analyze your monthly income and expenditure.
See the above parameters and determine the saving you can do as starting.
Don’t try to miss merge your savings with your other expenditures.
Be self-controlled enough not to use saved money except of a sudden need.