During a time of New Year's resolutions, many people set goals to get their finances in order. This is a great step to take, helping households get to grip with their expenditure and cash flow. One of the most important things is to plan ahead and ensure that there's an emergency account.
In general, people should set a primary goal to have $500 in savings and then work towards building an emergency fund to the value of three months' worth of expenses. This might seem like too big a challenge, but every small contribution soon makes a difference. First, review your bank and credit card statements from 2016 and identify spending surprises. The costs of holiday gifts, last-minute traveling, and weddings mount up. It's likely that the New Year will bring similar expenses, and you can avoid getting into debt to cover these costs by beginning a savings fund.
Reserve between $50 and $100 of your monthly paycheck to put towards your emergency fund. Once you've met your emergency savings target, begin putting the same amount of income towards a retirement plan. If you'd like to contribute more to the account, try cutting back on luxuries now and then. You can also use a proportion of your tax refund or company bonus to bolster your funds.
Identifying future spending and planning accordingly are vital to manage your personal finances. If you want to become more financially stable this year, putting some money into an emergency savings account is a great step to take.
Let the free MoneyTips Retirement Planner help you calculate when you can retire without jeopardizing your lifestyle.