52 Simple Ways to Manage Your Money – 23. Where’s The Chocolate? – Emergency Funds
What it is …
A dollar amount set aside specifically designated for emergencies.
Although the amount of three to six months’ living expenses is often recommended, less can be kept if there is substantial job security, good credit, and a tight definition of emergency.
How it helps…
Provides peace of mind.
Provides income, if necessary.
Provides freedom and choice.
Prevents the necessity of going into debt.
Key items to look for…
An easily and readily accessible account.
A strong definition of what constitutes an emergency.
The appropriate dollar amount to set aside.
Realize that this money is for peace of mind in case o f emergencies.
The investment will not provide a high return.
Time …
One hour to determine the amount needed and to create a savings plan if necessary.
Updating and revising as necessary.
Keys to action…
Define emergency.
Determine an amount to save.
Create a savings plan to fund your emergency money account.
Investigate interest rates and accessibility for savings accounts and money market funds.
SET IT UP
Review what you have done to prepare for an emergency.
STEP ON IT
Compare the results of your preparations with an accurate estimate of reality.
STEP ON IT +
Know that a well-developed plan will bring you a sense of security.
Notice…
Your willingness to plan for contingencies.
Your feelings when you think about an emergency in your family.
Your willingness to plan for a worst case scenario.
But what if…
My worst fears come true?
You will be in better shape, both financially and emotionally, to cope if you have a plan in place.
Thought primers …
When I think about the future, I…
If it turns out…
Planning for an emergency makes me feel…
If I found I could easily design a program that would protect m e…
One of the easy things about starting a plan is…
