When it comes to your savings account, how much is actually enough to help you get by in the case of a financial crisis? Generally speaking, any money set aside for saving is better than none at all. Of course there are a number of things you can do to ensure that you have enough of savings that will protect you in the future.
One of the worst financial problems that can happen to a person is the loss of a job. This can be detrimental when it comes to money and being able to continue to pay bills on time. Because this is a possibility with any career path, it is important to set aside money for backup. In doing this you are providing a money cushion while you are able to search for another position. Try to build a savings of at least 6 months of your current salary. It will take time to build this savings, so the sooner you get started, the better.
Financial emergencies are inevitable, but when you set aside savings for these emergencies, you won’t have to worry about stress. Whether your car needs to be repaired or you have to take your pet to the veterinarian, financial emergencies can cost hundreds or even thousands of dollars. Sometimes you will be lucky and have the option to make monthly payments toward your financial emergency. Most of the time though, financial emergencies will cost you a larger sum of money up front. If you do not have the money saved, you might have to rely on high interest loans, borrowing from a family member, or not being able to pay for your emergency. These are not the best course of action when it comes to a financial emergency. Just like a job loss, you will want to make sure you have a couple months salary saved for an emergency financial situation. Three months is your best bet, and it can take several months or even years to come up with that kind of savings if you have several bills and other financial obligations each month.
Not every job offers a retirement plan, which is why it is important to take the time to talk with a financial advisor who can offer advice on saving for your retirement. We all want to be able to retire knowing that we have the money to help get us by. Start saving for retirement as soon as possible, and you will be more likely to be able to retire (that is if you want to) earlier than peers who have no form of retirement savings.
Overall, just remember that any amount allocated towards savings for emergencies is better than nothing at all. Do your best each month to come up with some type of savings that you can place in a secured account so that it doesn’t get spent on something you really don’t need. Creating a monthly budget can really help with setting aside money for your future.
Want to get started making a budget? Read more about how to create a budget here.