Tag: How to budget

How To Create an Emergency Fund and Why It’s Important

Emergency fund
Create Your Emergency Fund Today!

Creating an emergency fund isn’t difficult so learning how to start shouldn’t be either. Here are 4 amazing strategies and tips to building your nest egg for a rainy day.

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When an emergency occurs, you’ll be ready

We can’t predict the future, but we can sure prepare ourselves for it when a rainy day disrupts our parade. Having an emergency fund allows us to have a peace of mind and also creates financial confidence. As Grant Cardone says, assume control of all situations; so prepare now so you’ll be ready later.

#1. Create an Emergency Fund Goal

When you don’t know where to begin, start by creating an emergency fund goal first. Everyone’s goal will vary due to income and the amount of debt carried. A good minimum would be $1,000 – $2,000. An ideal and longer term amount would be $10,000+.

Did you know that more than 50% of Americans can’t afford an emergency bill of $500? There is something seriously wrong with this.

DO NOT be part of this statistic, create your emergency fund goal right now. Literally right now. Just set it, and work towards manifesting it. YOU CAN DO IT.

Before you begin to build your hefty nest, make sure you’re debt free first. Contributions will be so much easier this way. If you’re not debt free, set the goal for your small emergency fund and work on eliminating debt before you start paying yourself first.

#2. Pay Yourself First

When payday comes, be sure to pay yourself first (SAVE). We often tend to splurge and sometimes put away what’s left. You know exactly what I’m talking about.

Paying yourself first is the complete opposite; spend after you’ve put money away towards savings. Check your calendar and see what must go towards your expenses. Deduct it from your earnings and focus on saving the portion that will help you reach your goal.

Find which week works best for you out of the month to save. Once your expenses have been taken care of, pay yourself first, and enjoy what’s left. If most of your income covers your expenses be sure to check out my post on the 7 easy ways millennials can start earning more money to see how you can earn extra income.

Now that you have your target, you understand how much you must put into savings every month to meet your emergency fund goal. Do what you have to do in order to make this happen.

Here are some quick ways you can earn extra cash:

  • Recycle
  • Deliver food
  • Offer ridesharing services
  • Teach online with Fiverr

Make sure any additional cash is directed towards your money goals.

#3. Don’t Let Your Savings Collect Dust

This is where you take the first steps towards allowing your money to work for you. Put it in a high interest savings account.

Keep about a quarter of your savings in your personal savings account as liquid asset (money you can take out immediately). The more you put into your high interest savings account, the quicker you will reach your emergency fund goal through the amazing work of compound interest.

Here are some banks that pay you interest:

What about the stock market?

Invest in the stock market if a). you have no debt and b). you’ve built your hefty emergency fund worth 3-6 months of living expense.

Read: How To Invest in The Stock Market (Step by Step)

#4. Be Consistent

In other words, discipline yourself to save for your emergency fund.

Saving money might seem like a sacrifice at first but by being consistent you’re now creating a great habit and financially stable life. Your future self will thank you.

Remember the importance of having an emergency fund. The benefits of being prepared include:

  • Having money in case of car issues
  • To cover emergency hospital bills
  • Security in case of a layoff
  • Financial peace for your family

The best way to carry out your mission on building your emergency fund is to put money away every month no matter how good or bad it was.

Develop this winner habit and you’ll be meeting your goals in no time.

Keep yourself motivated

If you find yourself losing motivation remember why you started in the first place. Nothing good ever comes easy.

Look for motivational and inspirational accounts on Twitter or Instagram. I personally post motivational content from time to time on IG.

Don’t stop at nothing.

Here are some life changing accommodations to help you save money

Save Money And Change Your Life
These Tips Require Discipline & Action | Start Saving For Your Future Today

1 – Don’t get into further debt. Wait on that awesome new car model that just came out. Perhaps work in your field a little longer before furthering your education. Remember, the more debt you have the harder it is to save.

2 – Start a side hustle. Use that additional income to add to your emergency fund and reach your target quicker. Don’t stop increasing your income.

3 – Live below your mean. This strategy will allow you to build your net worth so that you don’t live paycheck to paycheck.

Let me know in the comments below

Have you reached your emergency fund goal?

The readers would love to hear from you. Share your thoughts below.

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Debt Sucks | Here’s How To Pay Off Thousands In Debt

Debt Sucks Here's How To Pay Off Thousands In Debt
Stress free view

Whether you’re in debt with credit cards, student loans, car notes, or house loans, we all have some form of debt. The thought of paying off your debt might seem stressful at first but imagine what a debt free life could mean for you.

Debt keeps us from saving money, investing it, and reaching financial freedom. So what’s the best method to eliminate debt?

The Snowball Effect

Payoff Debt With The Snowball Effect
Snow!

There are a few proven methods to paying off debt. We favor the snowball effect method due to its quick momentum and effective results.

This is how it works

You start by paying down your smallest accounts first while making minimum payments on the rest of them.

The approach is to eliminate your smallest debt aggressively. Once you’ve paid off your smallest account, rollover that payment onto your next account.

By the time you’re paying off your third account, the amount equivalent to your monthly payments from the first two will have a drastic effect moving forward on your outstanding balances.

Avoid This Mistake To Stay Debt Free

Avoid Income Creep to stay debt free
Don’t spend more as you earn more

In order for the snowball effect to build momentum ,you must be consistent and not divert from rolling over once your first debt has been eliminated.

Most people will fill in the space with something else once they’ve paid off their car or credit cards for example. This spending habit pulls you back to a never ending cycle.

Remember, once you’re debt free all that disposable income is yours to enjoy. Save it, grow it by investing, and enjoy it!

Don’t let income creep lifestyle keep you from reaching your financial goals. This is how people making six figures a year can be in financial ruin just as much as anyone making five figures.

Read: How To Set Financial Goals: 10 Simple Steps!

Generate More Income To Tackle Debt

Generate more income to tackle debt

Everyone has very different financial situations or worlds. Create a world where you’re earning a little bit more than what you were in order to apply this additional income towards your debt.

Check out “These Are The Best Side Hustles For Millennials in 2020” to read about the best side hustles that can earn you additional income this year to make it happen.

Continuously work towards earning more income to payoff your debt more aggressively. The sooner you payoff one debt, the sooner you can move on to the next while eliminating accruing interest.

Create A Budget

Create a budget to tackle debt

See what areas you could budget on and apply money that was going towards junk food, streaming services, and other non essentials, towards your debt. You’d be surprised at how much you can save a week by meal prepping instead of eating out daily.

Write down your expenses and see where you can cut back. This strategy will help you not only develop a winner habit but play an important role in your journey to a debt free life.

Mint is a great app that breaks down your expenses and allows you to have an overview on all your account balances.

It Takes Discipline

The fact that you’re here shows your willingness to make this incredible change in your life. Financial freedom is an amazing experience we all deserve a chance to.

Realistically, only by taking the necessary actions to see our goals through will we truly reach a debt free life. It’s time to live in the moment and focus on the things that truly matter to us the most. Be consistent, stay on top of your goal, you have the power to do this.

Read: 10 Successful Ways To Save Money During A Recession

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