Tag: savings accounts

Your Emergency Fund, is that the right name for it you may ask?

smbaccari

I was listening to a podcast this morning asking this very question. Well, I guess it really doesn’t matter what you call it. I think whatever “You” name it is what it is. The term “emergency funds” is not a comfortable term for you? That is fine, whatever works for you right? After all it’s called “personal” finance.

Building an emergency fund is crucial, no matter what you call it. It is the FIRST thing any financially savvy person would advise you to do. Most of us might get into credit card debt because we charge things on a card. This happens because we do not have the cash. I don’t mean just the small items we buy. Coffee here and there or lunch can certainly add up! The big stuff that is not part of your typical expenses. This is your deductible for a car repair or medical bill.

The refrigerator stops working. The faucet on the kitchen sink falls off in your hands. It happens at 9 PM on a Saturday night! Ya that happened! This is what an emergency fund or whatever you want to call it, is for! Life happens, and sometimes it’s very stressful! NOT having some extra cash to pay for these unexpected things makes it VERY stressful. In the long run, it becomes more expensive.

When I think of an emergency fund, I think of 3-6 months of expenses in accessible cash. This is what most of us consider necessary in case you lose your job. If your expenses are $3,000 a month then you have $9,000-$18,000 in savings. This is NO easy task to get to this point, and maybe you never get to a full 3 months. But it’s a good idea to try and worse case you have something to lean on.

This is not to say that you only spend this money IF you find yourself out of work! Your emergency fund, or whatever you name it, only has $200 in the account. I like to think of it as the de-stress fund.

But let’s say you get a flat tire and need to get it fixed so you can get to work. That $200 in the emergency fund can help you do that. This fund saves you from putting more on that credit card you are trying to pay down. How much you have in this fund is really a preference and what you need to be comfortable with. Remember this “fund” takes several months to build. It can take a year to reach your personal goal for the fund. Think of this “account” as a revolving door. Money will come out and the balance goes down. Next month, you cut out a few extras. You put that money into the emergency fund instead. The goal is to have money set aside for the “unexpected”.

And NO this is NOT what the “credit limit” or CASH advance on your credit card is for! It is NOT something you should use for your unexpected stuff! Assuming you can help it…That is NOT an emergency fund! IF this is what you use as the emergency fund, the odds are good this will spiral out of control. Everything we do related to personal finance takes time.  When you make minor changes along the way, they start to stack up. Now you have created a new positive habit. Whatever you call this special account really does not matter… Just work on creating one! Get through the first few months of building this account and trust me you will feel empowered.  It’s a new year, so get on it! Next year at this time, you will look back and see the progress you have made. The sense of calm this will bring you is undeniable.  Good luck, you got this! 😊

Saving for that emergency fund.

smbaccari

Emergency Fund Savings:

We have all heard the saying, we should have an emergency fund, right. “They”, meaning the experts say this fund should be between 3-6 months of expenses. Not an easy task for most and can feel overwhelming for many. According to Nerdwallet  45% of Americans could not come up with $1,000 for an emergency. Most Americans Save, but Many Can’t Cover a $1,000 Emergency – NerdWallet  That might be a car repair, so you can get to work, a repair at home that can not wait…. The list goes on. Most people are saving money each month, which is great, and it’s usually in a retirement account and or a savings account. Yet, on average as a group we are falling short with short term “emergency” fund account. We have discussed many times if you really look at your monthly spending and your “habits” there is a good chance you can find an extra $100.00 plus a month to put away in an emergency fund account. Sure, it may take almost a year to get there, at that rate, but the process would be started. If you look at it more as a game and a motivator as to how do I cut out another $20.00 here and there, and transfer that right into savings, thing will happen quicker! The emergency fund is NOT an account that you get to look at the end of the year and say hey I save $1200 and did not need any major or unexpected expense, and then use that money for something like a vacation! Bankrate did a survey on people saving for an emergency or saving for travel. Travel Vs. Savings: Many Americans Are Prioritizing Wanderlust Amid Economic Uncertainty | Bankrate I get it, I want to travel more too, but I also do not want to be under the stress of having to reach for a credit card to pay for a plumber to come to the house for a leak or for new tires! Credit card bills are stressful! Let’s stay out of the rabbit hole. When we have an emergency fund there is a sense of calm and pride to know you do not have to rely on family, a last-minute high interest loan shark loan or the credit card. It’s hard. I get for some that emergency fund of say three months, might be a large number.  The real goal is to start and have an emergency fund for emergencies. 

Hopefully no real disasters come your way like a job loss while you are working on your savings account. Like every big challenge, you need to start the process with small changes and once you gain confidence from seeing the impact, it will get easier. Like most habits we are trying to change, you may stumble here and there, just get back at it, it’s not a failure. Let’s work toward that first $1,000 in emergency fund savings and use that momentum to do more! This is in reach! How cool would it be to be on the other side of the statistics, of who has a $1,000 or more in an emergency fund! You go this!

Habits

smbaccari

We all have habits, some are good habits, some not so good. Habits are part of our behavior in all the areas of our life. Some people are very organized, Take Jess for instance, her work papers and planner… are so organized and color coded! It seems to come easy to her when it comes to important items like work. She started this habit very young as a student and has carried this habit into adulthood. I on the other hand, really must focus on keeping myself somewhat organized. I was never an organized student, well compared to my kid. But at the same time, I know it’s a “weak” spot for me so I do what I can to make small positive changes to be better organized.  This is an issue I could easily talk to a stranger about, and they would be happy to make suggestions and share their organizational skills or lack of them as well…

When it comes to our money habits. We NEVER want to talk about them. Nope, we don’t want to share that stuff! We all have money habits, again some good, some not so good. Let’s be realistic, we can’t fix all our bad money habits overnight, and maybe we don’t have to fix all of them? Maybe some are not that bad?  But I am guessing we secretly have some things we do repeatedly, that we say to ourselves, why do I do this to myself. 

In today’s world with so much online banking and automation that we can do, some of these bad habits might be easier than we think to break. To really start to make changes, you need to be honest with yourself as to what is a problem.  Write it down! Put it on paper and look at IT! Just ONE problem, not all or many of them if there is a list… Own it! Then write out the steps you need to take to make this a bad habit you no longer have.  Maybe you share your bad habit you are trying to break with someone you know will emotionally support you. That might be a spouse, a good friend, a co-worker.

Setting a goal is easy, executing it, not always as easy.  Maybe just saying the habit out load to someone and talking about it will be the biggest step. After that it might get easier to mentally tackle the habit. Good luck, stay focused and you got this!

Week Two Money Challenge!

smbaccari

Hi everyone,

So how did we do last week with finding an extra $50.00-$100 in our monthly budget to allocate to our long term/retirement accounts?! Again, the goal here is to keep us all accountable! Its like getting up at 5 AM to meet your friend for a run! You get up, because you know they are getting up! This blog is a support blog to keep us moving forward. If you miss a week or, have a weak moment and buy a new pair of shoes… Just get back at it! After all we are only human.

For week two, lets focus on re-looking at our monthly spending and really digging into where we are spending TO MUCH $$$!!!  I personally found 2 items, that I KNOW I cancelled, and YET there they were back on my monthly charges! I finally got that fixed! It was only a combined total of $40.00, but still.

Once you re-look at the past three -four months of your spending we now need to find another $50.00-$100.00 in the budget to build the emergency fund! The goal is to get to three months of expenses. But the first goal is to get to $1000 in that fund. Let’s make part of this week’s challenge to have that money go into a high yield savings account! This is different than a regular saving account. There are several to choose from. Some suggestions are SoFi, Marcus by Goldman Sachs, Citizens… Many to choose from. Just make sure you can open it with NO fees, and NO min. Read all the terms as well. Most of these accounts are Online ONLY.  It’s been a long time since your money could make 4%-5% interest in a SAVINGS account. This is NOT a CD account. It’s a high yield saving account and you can get at your money at any time, unlike a retirement account.

Should you have any questions on how these accounts work, there are usually 1-800 numbers to call and talk to someone.

So that’s your WEEK TWO Challenge! Find $50-$100 a month, set to automatically funnel into a High Yield Saving account with a goal to get to $1000 to be the start of your emergency fund! Remember when we set it to happen automatically, and treat it like a bill, you will make it happen!! We pay ourselves first!!! Good Luck! You got this!!!

Saving for an emergency fund:

smbaccari

Let’s talk emergency funds! All the stats tell us less than half of Americans have three months’ worth of expenses in the bank. Other statistics tell us over 50% of people could NOT come up with $1000 if they needed to!

The experts tell us we must have three-six months’ worth of expenses in the bank for emergencies, like losing a job.  Let’s say you spend $3000 a month on average for expenses. Expenses are the essentials, like rent or mortgage, insurance, electric bill, groceries… You get it. Not the extras like takeout food, going to the movies…new shoes. 😊 For this example, we are using $3000 per month as your “essential” total, therefore you should have $9000 in a savings account. Yikes! That’s a lot of money!! I know I get it… But you must start with something… Maybe the first goal is half of that and as you build momentum it will get easier… It may take several months to get there, maybe a full year+… but we need to have a starting point… This is a SAVINGS account, NOT a retirement account. So, NO IRAs. Or ROTH IRA’s, 401K’s…  a savings account that you can access immediately!

This looks like a HUGE undertaking… I get it… We are NOT lazy; we work hard for our money! BUT are we paying attention to our money??? What if we start to drill down and pay attention a little bit more.

 Have you ever actually gone through your bank statements?  With online access to most of our accounts you can really drill down and see what you’re paying for.  Doing this for two or three months in a row and you start to see some things that pop up that maybe your saying “I didn’t know I was paying for that!”

Maybe it’s just $20.00 here, then $30.00 there… Or even $8.00 there… and before you know it you can probably pull together $100 maybe even $200 a month of expenses; you really do not need or WANT!

Let’s start there… And if you can’t get yourself to do this simple task, it might be worth looking into apps like Rocket Money or Truebill. Both apps help track your spending and can cancel subscriptions for you. Rocket Money also allows you to “automate” some savings as well. Both apps for the basic plans start at $3.00 per, but if it saves you $50+ a month and gives you a clear idea of where you are spending your money… Might be worth looking into! 😊 There are several apps out there so do some homework and put together the best plan for you! The goal is to DO SOMETHING… Once you start and get a handle on your HABITS… You can start to work on NEW Habits… That’s what all this money stuff really comes down to OUR HABITS… The goal here… FREE up some money, move it into your savings account AUTOMATICLY… and you will find a few months down the road you have money in the bank for those two new tires and you do not need to stress! 😊Good Luck! You got this!!!