Hey guys hope all is well. Excited to share more tips around #BetterMoneyHabits in partnership with Bank of America. Today, I am giving a few tips on creating an emergency fund for “just in case” purposes or you can call it a “rainy day” fund as I was inspired by this Better Money Habits article *link*. It's usually suggested to create an emergency fund for 6-9 months worth of expenses but in this blog post, to ease into it, we’ll focus on jump starting a fund with 2 months worth of expenses. Check out more ways to save at the Better Money Habits site and see the ways I’ve implemented some of its advice below.
I know what you’re thinking, if I am young why do I - 1. Need an emergency fund and 2. How should I add up my monthly expenses to make sure I am saving the correct amount of money? The simple answer to the need of an emergency fund is for safety. It’s always better to plan ahead of any unexpected urgent situations such as your car breaking down, water leak at home, or something more serious. For the second question, I would include any recurring monthly expenses similar to the following: rent, food, transportation, debt payments, bills, and any other personal expenses you spend money on every month.
Check out an example below on how to do the math for an emergency fund!
Add up your monthly expenses
Rent, food, transportation, debt payments, etc.
Let’s use $3,500 per a month for this example
We are saving for 2 months worth of expenses
$3,500 x 2 = $7,000
Let’s save over a 2 year period
Make this simple by saving each month
$7,000 / 24 = $292 per month
Set up automatic transfers
To make your life easy, set up automatic payments from your checking to your savings account for $292 for the next 2 years and now you can sit back and relax
Now see, that was not so hard to figure out. Having an emergency fund is great protection from the unexpected twist and turns that tend to always pop up in life. It also helps put your mind at ease when other things in life are off balance. I also wanted to make sure I let you guys know there are so many more ways to trim expenses and use that money for your emergency fund. See more information on the BMH website.
As life happens, it’s easy to lose sight of what’s important when it comes to your finances. I’m so excited to have a resource like Bank of America’s Better Money Habits site along with their Spending & Budgeting Tool, located in their mobile app that helps me see where my money is going. Just select Spending & Budgeting in account details! See more information on the BMH website.
Hope today’s post was helpful and that you are now in a position to start building #BetterMoneyHabits!
Post Details
Photographer: Mark Asuncion (@moodbymark)
Location: New York
In partnership with Bank of America
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Let me know your thoughts on the photos, until next time!
Thank you for reading and Let Your Voice Be Heard Below!!
WSP