If this year hasn’t shown us anything, it has proved how vital an emergency fund really is. A home repair, unexpected medical expense or a sudden reduction of income can create a lot of feelings of overwhelm, confusion and frustration.
Saving is a vehicle used to set aside a predetermined amount of funds for emergencies, a future purchase or simply put – peace of mind (which we all need more of). A personal savings account is ideal for emergencies since you are able to access the funds relatively quickly, with little to no risk involved.
Set a specific savings goal
For every dollar that isn’t assigned in your budget, your spending habits will do the assigning for you. Please be intentional with designating a set amount every pay period to your emergency fund. Even if it’s $20 each pay period – start somewhere. The amount can be adjusted over time as your comfort level (and bank account) increases. Set an aggressive, but realistic goal to challenge yourself. While you may hear what others are doing or should be done, focus on what makes you feel most comfortable. This could range from six months to a years’ worth of living expenses or income.
Evaluate what’s important and work your plan
Take your top five values and rank them from 1–5, 5 being of least importance. Consider what values will have your undivided attention for the next month, quarter and/or year. Having laser focus in this area allows you to work in increments while avoiding the all too familiar feeling of overwhelm. Whether you choose to work on one area or all five isn’t significant; what matters is the ability to be honest with yourself about what you can properly handle.
Never forget to pay yourself first – you (and your finances) deserve it
There are so many things demanding your attention and oftentimes paying yourself first is last on the list. Don’t forget to invest (aka save) for yourself! Set up automated drafts to eliminate the hassle of trying to remember this every pay cycle. On another note, saving and investing in a class, certification or something to further enhance a preferred skillset classifies as an investment.
Commit to lifelong learning
The road to financial wellness continues to change based on life events that will most definitely occur. Your commitment to remaining flexible and learning through all situations will definitely guarantee your success. Remember, there is no one size fits all approach for saving and investing.
Trust the process of your ideal lifestyle by incorporating what you value most to why you are saving. Keeping these goals at the forefront will help guide your decision-making as it relates to your finances.