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Recent events have made it abundantly clear that luck favours the prepared. But it’s also become apparent that it’s easier to be prepared for a crisis when you have cash on hand. This can be an issue for a majority of people seeing as almost 25 percent of Americans don’t have any emergency savings at all and 1 in every 10 people in the UK haven’t any savings whatsoever. This is a particularly dire situation to be in because many life events require a hefty cash payment.
Medical bills present the most obvious threat to your financial future if you live in the United States. According to research, over 62 percent of personal bankruptcies were caused by the expense of medical issues. Other events that could cost a hefty amount include disastrous car accidents and terrible home maintenance mistakes. If you want to walk away from such expenses with your finances in order and your future intact, you need to have a robust savings account.
Below are five methods you can use to ensure your savings account is large enough to cover most major emergencies.
Make a Budget
Few things are as important to your future financial stability as making a budget. Without a budget, you have no framework to work with when you’re trying to cut down expenses and increase savings. Using a spreadsheet or good old pen and paper, list down all your sources of income and your expenses.
Use receipts to form a ballpark figure of how much money you spend on a month. Compare the two columns and analyze what you’re spending too much on and what you could excise from the budget entirely. Update this information to guide your spending and saving plans. Start noting down everything you spend in a cashbook so that you know what is available to spend at a glance.
Cash Book A6 – Single Column (Pink)
Reorganize Debts and Loans
Very few people have the unbridled pleasure of saying they have no debt. Dealing with debt can seem daunting, but you must organize them if you are to stand a chance of removing them from your budget. Gather the latest statements for your housing loan, student loans and car loans, the three largest types of debt. Contact the companies and businesses you owe money to and work with them to restructure your loan. This will allow you to keep paying them off without draining your income.
Analyze Recurring Costs
People follow patterns, and one way you can see these patterns is through your spending. Recurring expenses can include taking refuelling the car every week and monthly subscription payments. List down how many recurring expenses you have and check which of them you can remove.
If you’re subscribed to three streaming services, maybe you can make do with one? If you can walk more rather than taking the car every day, maybe you can save on fuel? This can help you streamline your budget and put the money into your savings instead.
Formulate a Meal Plan
Spontaneous food expenditures can be costing you more money than you realize. How many times a week do you order expensive takeaway instead of cooking with ingredients already in your kitchen? Instead of spending so much money on food, come up with a weekly menu.
Use a meal planner and formulate what you’ll be having for each meal, then ensure you order the groceries ahead of time. This will help you avoid a binge takeaway order and make it easier for you to track the expenses in your budget.
Eating home-cooked meals also have the added benefit of being healthier, since you control how much sugar you consume.
Reduce Electricity Use
Aside from rent, utilities are probably the next most expensive item on your home budget. And among utilities, electricity likely takes the top spot.
So much of modern life revolves around consuming electricity and you could be spending way more than you need. Save money by unplugging electronic devices when you’re not using them, this includes laptops and phone chargers. Remember to turn off the tv if you’re not watching it.
You can also concentrate on which areas you and your family spend time in. The electricity bill can be significantly lower if everyone spends their time in the living room, rather than in separate rooms with lights on and heating running in all the rooms.
Beefing up a savings account is by no means an easy task. But every effort can help make your account more robust and shield you from the devastating financial loss of emergencies. Every penny counts and these methods will allow you to put them towards securing your future.