Here are some basic financial planning strategies which will help you get ready for any unexpected expenses.
Life is interesting. But sometimes it tends to throw some hard moments that are really hard to predict.
It’s true that the punch you don’t see coming puts you down, but you don’t have to land on a hard merciless surface.
In the economic time we live in, it’s common to hear of people who woke up in the morning and realized that their job is gone. Maybe your kid just fell sick and the cash demands are hefty or the mechanic says the car needs a gearbox replacement.
If you are not ready, these events can leave you overwhelmed and drive you deeper into debt.
But it doesn’t have to be this way. In fact, there is a way to prepare for the unforeseen and inevitable events that may leave you confused. Few things will assure you some peace of mind than knowing there is some money sitting somewhere just in case an emergency struck.
Most people find it out of reach but if you can approach it from a strategic angle, you can win. Here are some financial planning strategies.
Scrutinize and study your spending
To start saving you need to understand how much is spent on what every month. Observe your spending habits especially of the things that seem cheap. The truth is, they will add up to sizable amounts by end month. Remember that even a $100 a month is very significant to financial planning and emergency savings.
Set achievable goals
Saving $5000 in a few months is not an easy task, especially when you have family, kids, and mortgage to take care of. When the target seems out of reach, motivation dwindles away and the next thing you know is that you have veered off the track and give up.
What if the goals were segmented into small but significant milestones? They automatically become achievable. To be more effective, create targets within range and give them a timeframe. When you achieve, say, $1000 in three months, move to a higher target. Before long, that savings account will be swelling up.
Create a budget that is below your means
The number one reason that leaves people in a continuous state of debt is a lack of financial planning and the habit of living beyond their means. Create a budget that focuses on necessities and avoids items that bloat your expenditures.
This will help you make a continuous contribution towards the fund. While sticking with a budget could be a challenge at first, you will soon adapt and experience the feeling of a constantly growing fund.
Set up automatic payment
Spending will always be an easy task. Sometimes, you can’t believe how fast the cash was spent. If you are prone to spending money as soon as the pay drops in, set up an automatic payment that will send some money to the emergency account.
Start considering it a bill of some sort that has to be paid on regular basis.
Ask your service providers for better deals
With so many options around, there is always room for negotiation. Start with the insurance or the credit card company and ask for better rates. If they can’t provide what you are looking for, then it’s time to find a better option.
Most credit cards offer great rewards and it’s always prudent to make sure the rewards are on items or services that you constantly spend on.
Start making more money for the fund
Normally, people do odd jobs to make ends meet when tragedy comes knocking. The same effort that could have been used to create a cushion only that this time worry and fear is dominant. Instead of waiting until when things go south, it’s wiser to work extra time now and have something stored up for a rainy day.
There are numerous ways to make some cash online or to borrow as well. Better still you can get a side job and make sure you save up most of the earnings.
Refrain from spending the money unless it’s an emergency
When cash is lying somewhere, it’s easy to be tempted to use just a little for other expenses like insurance. Always remember the purpose of the money and if any expense can be predicted then it’s not a beneficiary of the fund.
A good way to make sure it only serves the purpose is having an inconvenient savings account. It could be the distance you have to drive to withdraw the money or have it separate from the daily checking account.
The recommendations from financial advisors about financial planning and emergency savings are endless. It’s undeniable that you stand a better chance when tragedy finds you prepared. To prepare efficiently, you have to make some lifestyle adjustments that will help nurture and grow a sufficient fund.
Additionally, don’t forget to reward yourself when you successfully accomplish a milestone. Reward yourself with something special and graduate to the next target immediately.
You don’t have to wait another month and don’t let fear hold you. Start today and accumulate some money that will make you confident even when facing an emergency.