Savings are always necessary to solve any financial emergency you can face unexpectedly.
Unfortunately according to the recent survey more than 20 percent of all people have debts exceeding their savings, and approximately 13 percent have no emergency fund at all. Although the statistic is improving, we still have a lot of problems with personal financial management.
There can be a situation when you really need to use fast payday loans website to get a short-term credit, but it will not substitute the emergency fund you should always have. So let’s determine some useful steps to prepare for savings and building the necessary emergency fund.
Don’t rely on credits
Today you can easily use a credit card to afford any purchase or cover the necessary spending. However, this is not an emergency fund, but just a delay in payments. So it will not substitute your own saved money you can use with no consequences.
At first, any credit must be returned within some definite period and under certain conditions. In such a way, you can cover some expenses, but it will not help to deal with a mortgage or even car payments.
Moreover, when you borrow money, the lender expects definite interest rate to be paid. If you take short-term loans it can be higher due to more risks the lender takes. However, long-term obligations will also eat out more of your money eventually due to the growing price of the purchase you make. So you should understand that any credit means you will definitely pay this amount of money with additional covering of interest rates. So you will need to work and earn more.
Today your solvency is determined by the credit score you have. And the main factor is the difference between the credit card balances and limits. So if you use your credit card in a monetary emergency, your credit score will decrease. As a result, it will be more difficult to borrow a significant amount in future.
The amount of money you need
It’s not a fantastic number you can’t calculate. All your expenses can be noticed and summed up, so you will have definite amount of money. And when you have such calculations you can easily predict the necessary fund you need to create to secure yourself from the possible changes in your life.
However, not many people have ever thought about the necessary amount of money to cover their regular spending during six month. So when you want to calculate this number, you should consider the following expenses:
– house and car payments
– utilities and other recurring bills
– cable and internet
– gas and maintenance of a car
– unpredictable expenses
At first you can be shocked with the result, but you have time to reach there. So you just need to start. It can be some dollars for the beginning that you will increase when you can. Also, you can reduce some spending in order to have this money saved.
In conclusion, we can say that any financial actions always require some knowledge and preparations. So it’s better to spend some time to get the necessary information and use the possible loopholes in financial laws that will help you to save enough money and use all benefits of your situation.