Did you know that having a financial reserve, also known as an emergency fund, is a way to ensure a quieter life? It serves as a savings for eventualities like unexpected expenses, discharge of debts, purchase of a good of high value, even for a moment of unemployment, among others.
However, a lot of people wonder if it is necessary to have a fund with high values or a small saving is enough. Want to know how much money you should have in your financial reserve? Check here what you need to know to define this issue. Come with Robert Lovelace .
Money that will not be invested
The emergency fund needs to be easily accessible, after all, it will be used to cover contingencies. Therefore, it is not interesting that you deposit this reserve by investing in stocks, assets or bonds. The ideal is to have the fund in the savings, to be withdrawn when the need exists.
So, remember that what is left over from your budget should be part intended for a profitable investment, which can be used to fulfill a dream, and part for a financial reserve. Understanding this is critical for you to check how much you need to book for contingencies.
You will never know how much money you will need to cover the unforeseen
We must deal with this fact: because it is something unforeseeable, the value of an emergency is unknown. So the more you book the better. But do not despair! There are some guidelines for you to approach a value for your fund.
Do you use the car a lot and the insurance does not cover everything? How about stipulating the value of a repair? If, in another example, you want to sell the house to invest in the business itself, you can create an emergency fund with a value compatible with a few months of rent.
To have a value base, you can think of consolidating a financial reserve in the amount of 3 to 6 months of expenses.
Always feed the emergency fund
The intention is that you have the value to pay for the unforeseen or, at the very least, reduce damages by giving an entry, paying more installments or staying for a while. So, if the reserve is reduced, you should continue to save money and apply it. After all, it’s not because you’ve been through something you need to shell out with urgency, it will not happen again.
Read also: “Creative ways to make savings a daily habit”
Check how much you can invest monthly to set up your fund
Having financial organization, staying within budget and saving to fulfill your desires should always be a priority. So, focus on what is important, what will make you happy and reserve each month a little to prepare your emergency fund.
Making a budget on a spending spreadsheet is a great idea, since you can list the amounts that are intended for all expenses subtracted from the revenue. That way you can see how much you are going to save and how much you can go to the reserve fund.
Can savings play the role of reserve fund?
Yes, by the way, it’s the most recommended! In addition to protecting yourself against inflation, it is an application without too much bureaucracy to be bustling. However, you need to think that if the intention is to save money to buy a house or a car, for example, the ideal is to look for ways to value more.
Is that you? Do you have your backup fund? Would you know how to act in an emergency if you need money? Leave a Reply