When the unexpected negative event arrives. A flat tire, your child gets sick, the dog gets friendly with a porcupine, a water pipe bursts, your washer quit working, or something else. Will you have the money to pay for an unforeseen issue or event? Savings, easily accessible money, can bring relief and peace to many scary situations. Asking others for money, whether that is your family, friends, or a lending institution can be shameful plus a potential hassle. Depending on what you must do and how long you wait for the money to arrive.
According to the Consumer Finance Protection Bureau (CFPB), up to 36-40% of Americans are financially fragile, they cannot produce $400 cash within 24 hours for any emergency. Nor can they produce $2,000 within 30 days. This raises concern and begs for individual examination. Being terrified about your financial situation is no way to live. You have power and control over your resources and can begin to take positive steps to help yourself and your family. Create a financial safety net (access to cash, proper insurance coverage, supplies) to aid with unforeseen emergencies. Extra money via a savings plan, can positively help you financially, mentally, and emotionally plus could decrease stress. If you have ever experienced a financial hardship, you understand the toll it can take on you and your family.
If you currently do not have any money saved, here are some ideas to get you started. First, it is helpful to have a purpose or goal in mind for your savings plan. Determine the exact goal and write it down. Put this written goal in a place where you can see it often. A mirror, refrigerator, or work area are suggestions, anywhere you look often, as a reminder. Decide what motivates you to save for this goal. Every person has different motivators and must determine their own. When I first started saving many years ago, I used fear and not wanting others to control me as my first motivators. I did not want to be homeless without food, nor did I want to ask others for money. I began working a second job for extra money in addition to selling several household items. This got me started on my savings plan journey. It is more fine-tuned now, saving for emergencies, replacement items, vacations, and beauty treatments. To me, it is like a challenging financial game that requires strategizing and thinking, depending on one’s current goal. What can I do to meet this savings goal? Brainstorm and be creative, knowing what will work for you and your individual situation.
There are several types of savings plans, structures, and purposes for saving one’s money. One can open a savings account at a financial institution or keep it in another location (home). A person can call their savings plan an emergency, short-term, long-term, savings for replacement items, or any name you find relevant. You can create any type or amount of savings accounts you want, depending on your situation and goals. The key is to decide and take consistent action.
Having quick access to this saved money, liquidity, is important for emergencies. Making higher interest on your savings is ideal, in addition to easy access. Remember that most savings accounts and money market accounts yield lower interest rates and are not used as investment tools. Comparison shop for all your accounts to get the best interest rates available. Research the financial institution and its reputation, customer satisfaction ratings, and ask any questions you may have about their services before deciding where to place your money.
Remember that the main point of a savings account is liquidity and easy access within hours to your cash. Nothing can ease pain like having money to pay for things you need during a crisis. Deciding to create or open, add to, and use this account is your job. It is about priorities for you and your family and how you will protect them from risk. Savings is one part toward safeguarding you and your family against financial emergencies.
To increase your savings, one can generate extra cash in a variety of ways. Getting organized with your finances, cut back on buying all goods and services, getting a second job, use your DIY skills, sell extra household items, negotiate service bills such as cable or cell phone plans, price check items, and haggle for prices. There are many other innovative ways to increase your savings amounts. The key is to decide your savings goal and begin the first step.