If this pandemic has taught us anything, it's that having an emergency fund is really a good idea. Do you wish you had one? Let's think about getting one together - now.
The first question to ask yourself, is how much do you need to put away? Most people start with a 3-month plan. Gather your bills and add up the following:
· Cell Phone
· Car payments/Auto Insurance/Gas
· Medical costs/Insurance/Medications
· Childcare cost
· Groceries/Toiletries/Personal Care
· Loan/Credit Card payments
Now, once you have all those, add them up, multiply by 3 for a three-month plan. I am going to estimate that your number is about $12,000 to $20,000 depending on your circumstances. Sort of shocking, I know.
Now, what to do? First, start a savings account. Second, pay down those bills. Third, every time you take out a loan, sign up for a monthly service, don't do it until you have three months of the payment that you can put in that savings account. (Example: New car payment is $250/month. Put $750 in your savings to cover the cost for three months before you take out that loan.) Fourth, start living under your means. A new job or promotion does not equal a larger home or newer car.
Smart saving and smart spending will help you sleep better when the next economic crisis comes. For more information contact Stevie Swain at Stevie@swainconsultingllc.com.