Establish Your Emergency Fund at Any Age
Savings accounts serve to fund various payments like mortgages, travels, or business capital. But special cases like emergencies call for an emergency fund.
You might have heard a lot of stories of people who wished they’ve started saving early and there’s a good reason for it. Saving early means your money can grow and accumulate interest longer. But, it’s never too late to start saving. We’ve come up with a guide that gives you an overview of how to save on your emergency savings during your life stages.
Jumpstart Your Saving Habits at your 20’s
Your 20’s is an exciting and great time to save. You can begin with small increments and gradually increase your saving as you go up through your career.
It may look like an overwhelming commitment because you’ve got to pay your bills but it’s also the perfect time where you have fewer obligations. Compared to having a family, being single means, you’re only concerned with your expenditures.
Starting to save is probably the trickiest part, but you should have no reason to. Start small, some banks offer a very low minimum amount to open an account. You can then deposit increments and P500 every payday goes a long way.
When you choose to use the automated savings account feature it becomes a good habit and the “save first, spend later” habit and can be carried out throughout your advanced years. Saving early at your most energy-filled years is a great foundation and eventually grows steadily but consistently.
Be free of debt in your 30s’ and stretch your finances
By this time it’s more likely you have an increased salary making it possible to increase your savings as well. With your gained experience and added portfolio, you’ve got more and better opportunities that will add to your income.
Saving 15% of your salary can fund your retirement and allocate funds when you want to start a family. Make sure though the emergency funds you’ve saved in your 20s should be left untouched. Consistency is the key when you’re saving, this way, it won’t be too late to save for your retirement years.
Having debts is unavoidable and if you have loans make sure you’ve got it under control. Free yourself from debts, this way you can focus more on saving. A good rule of thumb is to set a minimum of 6 months’ worth of savings.
There are ways to reduce your annual expenditures. Reduce your credits and request for a rate reduction, or save money by asking for tax refunds.
Think retirement at your 40’s
When you can save early, your emergency fund in your 40’s will be focused more on your health and retirement. You can liquidate assets that are not needed so you can double your emergency savings. It’s also a good time to go through your finances and look for investments that can put a strain on your finances.
This is also a period to think of allotting portions of your emergency fund for your beneficiaries. So, in a case of an emergency, your dependents can get funds. Your children’s college education can also be included in your emergency funds.
A way to check if you’re saving enough is that your emergency savings should be equal to your current gross annual income.
In your 40’s you’re most likely at the peak of your career which also means you’ve got a better salary. Though you do have bigger financial responsibilities at this time, you’re more likely to get more income streams.
The overall saving is about consistency and forming a habit of saving means you lessen the burden and stress of worrying about the future. Once you’ve started saving and sticking to your monthly deposits it becomes easier and easier to save more. Above all, avoid debts as freeing yourself with these obligations will help you to put more energy into saving for you and your family.
What if you don’t have an Emergency Fund?
Unfortunately, life does not always give us the opportunity to create savings for emergencies. If you don’t have an emergency fund set up yet, you can try taking out a loan from Robocash full description, an online service that lends people funds for various needs. You can borrow between 1,000 and 25,000 pesos for up to 30 days. The main thing is to remember to pay back your debt on time.
Mustafa Al Mahmud is the Founder and CEO of Gizmo Concept and also a professional Blogger, SEO Professional as well as Entrepreneur. He loves to travel and enjoy his free moment with family members and friends.