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Most financial experts say that rainy day savings is the money which can help you to fix unexpected problem or to help you to stay afloat within a few days. In other words, this money can’t provide you during a long term. Emergency fund is intended to help you to make ends meet in case of a serious life change. According to a perfect scenario, emergency savings should be enough for you to cover all your living expenses within 3-4 months. But for sure – the more money you have, the more confident and protected you feel yourself.
To build an emergency fund it’s necessary to understand one thing: the less money you spend the more you can add to your savings. That’s why it’s time to start counting your money. Write down all the purchases you make within a month, so in the end of it you’ll be able to analyze your spending. It allows you to understand how much you spend on your wants and on your needs and which expenses you can easily avoid.
Ask yourself some questions and be honest in your answers. For example, do you really need a cable TV? Can you do something to pay less for it? Can you refuse eating out with friends? Do you really need getting Starbucks coffee every morning? Think of all the payments you make regularly and contact service providers to see if you can reduce your expenses. Even a small change can lead to impressive results! Start respecting your money and do your best to stop throwing it on unnecessary things.
The next step is to decide where to keep your savings. Keeping it at home is risky because when you have an easy access to the money you can use it for any other reason which is not an emergency. It’s better to put your money in the bank where it’s safe and you can benefit from your deposit.
Understand that having an emergency fund will make you feel independent. For example, if you’re facing unforeseen business costs then instead of taking out a short-term business loan you can use your own money. Focus on boosting your income and consider different ways for doing that. Think of your skills – maybe you can get a part-time job? Surf the Internet. Fortunately, there’s a variety of online jobs which can be become a source of basic or additional income.
If you always had a passive attitude concerning your money and your income, then it’s time to look around. Did such attitude help you to achieve your goals in life? Most likely the answer is “no”. Start using your time effectively, it should bring you money. Learn to think like a potential millionaire and sell all the things you don’t need, start make money on space you don’t use. Just take a look around and you’ll see that people looking for opportunities find them sooner or later.