Found Money:
How To Generate Quick Cash In An
Emergency
Start to
Build your Emergency Fund
Finding money during an emergency can be
very difficult if you fail to plan.
Establish emergency savings in both good
times and in bad. The chance is very
good that you will be called upon to put
out a sum of money on the spot and when
you least expect it.
It is a very good rule of thumb to sock
away three to six months’ living
expenses. You can also use this same
money when you’re faced with major,
unplanned expenses such as a car that
breaks down or much needed college
funds.
The purpose of this type of savings plan
is to put the money away consistently,
and then tap into it for true
emergencies. The success of this type of
long-range savings plan will depend less
on the rate of return than on,
day-by-day, putting the money away and
then leaving it there for a true
emergency.
Lock it away and then hide the key.
People who are living on a fixed-income
will have the toughest time setting
aside money for emergencies. If you can
manage to just squeeze out another $10
or $20 each month and sock it away into
a money market account, it’s worth
doing.
If you decide you need $2,000 in an
emergency fund, look at what you can
afford to sacrifice each month from your
current budget and then look at that sum
of money as a bill to pay yourself.
Decide on a monthly amount and then put
that same amount aside every month and
then watch it grow.
Once you have reached your goal of
$2,000 you’ll now be in the habit of
putting away that extra set amount each
month. Keep on doing it.
Financial planners echo the idea of
treating your emergency fund as a bill.
Put the money away each month, but don’t
be tempted by the latest sale. You are
not to touch the amount, except for in
an emergency.
Putting money aside on your own is hard.
Retirement plans are successful because
the money comes out of your paycheck
before you can get your hands on it and
because there are taxes and penalties
for early withdrawals.
Stashing money away in an easy access
money market account takes discipline.
Limit your access to the emergency fund.
You can have immediate access to some of
the money, but not all of it. The bulk
of the fund is to be used, strictly, for
emergencies and nothing else.
Once you have saved up about two months
of living expenses, move one month of
expenses to a one-month CD. When the CD
matures, roll the principal and interest
into another one-month CD. Your savings
will grow well this way.
As you continue making regular payments
to the emergency fund money market
account, you will soon have another
month of living expenses that can be
used to invest in a two-or three-month
CD. If you are wishing to set aside six
months of expenses, continue the process
until you can comfortably purchase a
six-month CD. Your savings will
accumulate quickly this way.
Building
your Emergency Fund
Before you start stashing away your
money for an emergency, the first step
in building your emergency fund is to
figure out just how much money you have
to put aside in the first place.
People often don’t know where they’re
spending their money. Once you can
account for every penny, it’s a lot
easier to decide where you can cut back
and start to save.
You can’t always account for emergencies
so it is more critical to build the fund
as fast as possible.
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