Were You Ready For This?

The recent pandemic has brought to light the very real need for everyone to have an emergency savings account. Whether people lost jobs due to a business shutting down, or were unable to work due to illness or caring for a sick loved one, many people have lost regular income. 

Do you have enough money in savings to be able to pay your normal expenses for 3 to 6 months if you suddenly lose your income? Three to six months of savings sounds like a huge amount and many people think they will never be able to save that amount. It is possible with discipline and willpower.

There is a big difference between 3 months and 6 months of savings. How do you decide which is right for you? A household with two incomes would need less savings in an emergency account. A household with only one income or a self-employed household, it would be better to have closer to six months of savings in an account.

 So now that you know how much money you need, how do you start saving?  You have to get creative at cutting back on your expenses. A good way to do this is to separate a "want" from a "need."  A need is something you CANNOT live without - like food. A want is something that is nice to have, but you CAN live without it - like cable TV.   

Think about the things you have purchased in the last week or last month and divide them into needs or wants.  Think about the things you will purchase in the next week or month and divide them as well.  What things can you go without?  Can you fulfill a need but spend less money?  You have to eat, but it is more cost effective to buy groceries and prepare your own food rather than order carry out from a restaurant.  

What creative ways have you found to save money?  Answer in the comments below.