Just when you think you have it all under control someone goes and changes the rules. It seems that it works that way for everyone at some time in life. When it comes to finances the best way to plan for the change in the rules is to set aside money for a rainy day.
Most experts will tell you that you need to set aside at least three to six months worth of expenses so that you will be prepared for those times when you get sick and can’t work (or the worse case scenario of you losing your job). No matter what life throws at you it will be easier to push on through if you know that there is a safety net to catch you.
The idea of an emergency fund is appealing to most people. The problem comes in funding that account. Average families with average incomes that would benefit most from having an emergency fund are the ones least likely to be able to afford to save for it.
1. Set aside the tax refunds and tax rebates that you get for the next two years. It is money that you don’t see anyway and setting it in an interest baring account will give your more money in the end.
2. Take a seasonal job or temporary part time job and allocate all of that money for the emergency fund.
3. Sale some wedding gifts or other expensive items that you have around the home that you are not using (or maybe don’t even like all that much).
4. Allocate gifts and bonuses to go towards the emergency fund.
5. Cut extravagant or unnecessary expenses for one year to fund the emergency account.
Getting an emergency fund in place will give you the reserve cash you need to pay unexpected expenses without pushing over the edge of debt.