The holidays are almost here! How are you preparing for the gift giving season?
If you are having trouble staying on budget, you are not alone! Here are some tips to help you stay on track.
1. Start With an Emergency Fund
Whether you call it a “Rainy Day Fund”, “Emergency Fund”, or “Oh Shoot!”, the principle remains the same; an emergency fund is money that you have set aside in order for an…emergency!
The key word is unexpected. This fund is used for life’s “uh-oh” moments and provides peace of mind to those who use it. After all, how would you benefit from knowing if anything happened, you at least have some money to cover it.
-Unexpected car repairs
-Loss of a job
While this concept may seem elementary, it is still important. Never underestimate the power of a savings fund; even if you can only put $1 in it!
2. Separate Your Emergency Fund From Your Regular Funds
I used to have my emergency savings account at the same bank I used for my other accounts. That would have been fine if I didn’t consistently transfer money into my checking account whenever it was getting a “little low”, if I wanted to eat out, or if I wanted a new item.
I kept finding my rainy day fund depleted but NOT by rainy days! I would consistently have to start from square one each pay period.
Now, I have my emergency account at a totally different bank and the rainy day account remains for rainy days.
3. List Birthdays, Holidays, and Graduations in Your Monthly Budget:
My budget spreadsheet includes much more than just my monthly expenses.
Every month, I include birthdays, trips, and more in my expense category so that these things don’t become “unexpected expenses” that I need to tap into my emergency savings for.
4. Begin Saving for Big Ticket Items Early!:
Including birthdays in your budget is one thing, saving for that $1,100 cruise is a whole different beast!
One thing I absolutely HATE is having to squeeze the last two paychecks before a trip dry because I didn’t properly plan for it.
Nowadays, I put a little bit of money away throughout the year so that I’m not having to temporarily change my lifestyle for a trip that crept up on me.
The beauty of this is that you don’t have to save money from every paycheck- you decide how much you save and where!
This also works for car repairs, oil changes, or other payments you KNOW are coming. The trick is keeping this money separate and accounted for differently than the your everyday expenses.
Extra Tip!: You may want to look into getting a bank account that rewards you for saving each month or one that penalizes you for constant withdrawals to help keep you on track.
5.Name Your Accounts
In order to keep trip money from being “spent money”, I create a separate account for this goal- much like an emergency fund. Now this year is a little special but the same concept can be applied to other categories of your life.
I open a new account, go online and change name of the account to something like “DISNEYLAND 2020” and begin trickling the money I need in there. This account can be kept with your bank or you can open it with a different bank, if you’d like.
Effectively managing your finances really boils down to properly planning as much as you can and saving for events you can’t plan.
How are you preparing for the financial future? What are some ways that you keep your finances organized? How can you do better?
Leave a comment, below!
Also, what are some topics you’d like to see covered on our site? Help us provide helpful content by letting us know here.