Your next priority is an emergency saving fund that can support you in case of a job loss, car repair, medical expenses or even a disaster.
So, put in your mind that an emergency fund is your first priority.
If you don’t have a health insurance or a life insurance, you are in trouble! Both are very important for you and your family.
Now you know how much money you need to support yourself and your family every month.
With this formula below, in three years you will have an emergency fund that can support you and your family for six months.
There are studies that have concluded that health and job issues usually can be solved in sixth months.
You need to save every month = Your month expenses * 6 / 36
This is very important. It is hard to save this amount of money every month, but you will sleep much better when you know that you have this fund in the bank. After three years you can stop saving for this emergency fund, and maybe you can think in other dreams.
It is rare to find someone that has this emergency fund. A tip to save this money every month is an automatic deposit that you can program in your bank website. Every month this amount will be transferred from your regular account to a savings account.
If you are able to save more money, modify the formula replacing 36 for 24, or even for 12. You can achieve this emergency fund quicker. (two or one year)
Again, avoiding credit cards is the better way to achieve this emergency fund plan. If you pay in cash for everything, you will buy less, just because it is hard and not safe to carry a lot of money with you.
More tips:
- Forget the ads about airline miles or points that you earn using credit cards! Don’t use credit cards.
- Bring your lunch to work. You can save more than $200 a month.
- Reduce the channels in your cable TV
- Reduce the speed of your internet plan
- Buy a recipe book to practice and eat more in your house
- Try to contact your previous employers to check if there are no health benefits, pensions or profit-sharing plans that you left behind
- Ask your employer for a hard-earned raise
- Research in your job area for a most and seek higher paying job
- Try to find out an additional part-time job
A great way to make money faster is selling everything that you are not using in your home on ebay. (Books, magazines, DVD’s, CD’s, devices, toys, a lot of crap that you bought some day and now are useless)