Money You Don’t Touch!
Part of your preparations needs to be the establishment and growth of an ’emergency fund’ consisting of various options such as cash on hand, pre-64 ‘junk’ silver (90% pure), or gold semi-numismatic coins. Tess Pennington provides below a very good plan to increase your disposable cash as well as how to establish or increase your emergency fund. Once you get your cash flow increased by some of the simple things she talks about doing for others or similar ways and your emergency fund growing, you can take a percentage of that and increase your equipment and supplies necessary for grid-down situations.
My husband and I decided that we wanted to do something special with our family for summer and started saving money right after Christmas was over. We scrimped and saved and were able to come up with the money for a small vacation, plus a little extra that we put away in our emergency fund. When our vacation day finally arrived, we packed our bags and got on the road. At the last minute, my husband ran into Wal-Mart to grab some last minute items. As I sat in the car waiting for my husband to come out, I noticed the car running erratically and the temperature gauge started fluctuating. We decided not to chance it and headed home and switched cars. When we got back from our vacation, we took the car into the shop and they estimated it was going to cost us $1,800. As shocking as that figure was, we prepared for life going awry and had an emergency fund just for that reason. If we hadn’t of been saving money, we would have been in a world of hurt.
Out of the Blue Emergencies Can Be Costly
With a majority of our population living paycheck to paycheck, one minor emergency could send them into major debt. Having an emergency fund is your own personal safety net and a common sense approach to dealing with life’s unexpected issues. Minor emergencies such as job loss, car repairs, medical expenses and home fixes come out of the blue and can be costly if you aren’t prepared.
Keep in mind that an emergency fund is different from your savings account. Of course, both take a lot of restraint and sacrifice to build up; but the underlying reason to use an emergency fund is strictly for … you guessed it, emergencies.
Start Modestly and Gradually Build It Up
The goal for our emergency fund is to carry us for six months of job loss and we set aside a small percentage of our monthly budget to slowly grow this fund. After we pay our monthly expenses and bills, we normally break up twenty-five percent of our remaining income down in the following manner:
15% – savings/retirement
7% – emergency fund
3% – movies and family activities
As with all budgets, sometimes this figure fluctuates, so if we are able to put more or less in our emergency fund and savings, we have to adjust. But we try and always put something in. That said, what works for my family may not work for yours. Many financial experts suggest saving up to ten percent of your monthly budget to really get ahead in your emergency fund. Check out the steps below to get some ideas on how to build your family’s emergency fund.
Build Your Financial Freedom With These Easy Steps
1. Get out of debt. Your primary goal is to have financial freedom. Paying off your debt is the best way to free up extra money. After all, who wants to be paying interest on something you purchased two years ago? Organize and list you debts from the smallest to the largest and start paying the smallest debts first. Once the small debts are paid off, move on to the next largest debts on this list and snowball the payments. Essentially, you are creating a snowball effect with your payments and freeing up additional money in your budget for other uses – like an emergency fund.
2. Have a monetary goal set. Starting small and building upon your initial investments for your emergency fund is an easy way to start and not get overwhelmed. (i.e., I want to have an emergency fund to pay for car repairs). Some people start with saving $1,000 and many can find this amount hiding in their budgets. Once you reach your goal, move on to another one. Read more below on how to slash the budget.
3. Make it easy on yourself. One way to easily begin building your emergency fund is to create a separate account in your bank and set up automatic monthly transfers to easily move money into your account. There are some who prefer to have multiple accounts in order to organize their income better. Some have accounts strictly for emergency funds, savings, vacations, etc. This will help you organize your budget and steadily build your emergency fund.
On the other hand, there are some who do not prefer to keep their money in the bank due to concerns of economic uncertainty. In that case, you can hold your money in a safe or, consider taking your saved money and investing into precious metals. This ties the money up into a tangible investment and keeps you from spending it. It also makes it a little more difficult to cash in and spend it. That said, if the day came and you needed your money, all you needed to do is run down to the precious metals store in your area. Who knows, you could be getting more money than you started out with! As well, by using this method of saving, you could easily begin a very lucrative long-term savings method.
4. Start slashing the budget. Start eliminating the budget busters and non-essentials. Do you really have to get a four dollar coffee at the high end coffee house on your way to work? By cutting this small indulgence, you will save over a thousand dollars a year! In an article by The Organic Prepper, she explains how cutting the budget down to the essentials can save you lots of cash.
Now, let’s look at a bigger example. Let’s take the average 10 hour workday (including commute, lunch breaks, etc.) Now spend that day productively at home. Here are some things you might do that other people pay for:
- Growing food $20
- Yard work $40
- Cleaning house $50
- Preparing food from scratch $30
- Mending clothes and doing laundry $20
- Childcare – all day, simultaneous with other tasks $75 for 2 kids
- Bathing and grooming the dog $65
- Walk the dog at lunchtime $10
- Make your own cleaning products and health and beauty aids $20
If you add all of those things up, you are talking about a LOT of money. I based my totals on the prices of those services and goods in my area, and on an average day, I could “earn” $330. Tax free. On an annual basis of a 5 day work week, that is the equivalent of just over $85,000 per year. Again, let me reiterate: tax free, which can save you another 15-30%.
As well, you can research more gas efficient ways to drive to work or run errand and make goals to cut your gas budget by $50 a month. Moreover, finding a co-worker that lives in the area and carpooling to work can also save you lots of money. If you live close to work consider riding your bike to work or public transportation.
5. Don’t stop saving! What happens when you meet your financial goal? Keep going! Don’t take the extra money out and splurge. Start saving for another type of emergency. There are some who get hit with double whammies and have multiple emergencies at once. Let’s say you saved money for the car repairs example listed in the the second tip. When you hit your goal, move on to another one. You could start saving for an even loftier goal like saving six months worth of salary for a job loss.
To conclude, in this day and age, it is paramount to have an emergency fund to fall back on. Life happens and sometimes it doesn’t work out in our favor. Organizing your finances and finding ways to free up some of your money for an emergency will help you create a personal safety net. These are ones steps that anyone can do. When you have amassed enough money to make your financial goal, you will sleep better at night knowing that you can take care of life’s unexpected events.
Tess Pennington is the author of The Prepper’s Blueprint, a comprehensive guide that uses real-life scenarios to help you prepare for any disaster. Because a crisis rarely stops with a triggering event the aftermath can spiral, having the capacity to cripple our normal ways of life. The well-rounded, multi-layered approach outlined in the Blueprint helps you make sense of a wide array of preparedness concepts through easily digestible action items and supply lists.
Tess is also the author of the highly rated Prepper’s Cookbook, which helps you to create a plan for stocking, organizing and maintaining a proper emergency food supply and includes over 300 recipes for nutritious, delicious, life-saving meals.
Visit her web site at ReadyNutrition.com for an extensive compilation of free information on preparedness, homesteading, and healthy living.
This information has been made available by Ready Nutrition