The interminable pandemic has decimated many sectors of the economy. A year later, many families are still struggling to eat and pay bills as small businesses, the backbone of our economy has not yet fully recovered. Having an emergency stash of savings can help weather the storm without getting into debt and destroying your credit score. To find out more, keep reading to learn how you can start an emergency fund now and optimize your financial goals!
Welcome to new and returning readers to the Branding24Seven community!
The JMS team is back with valuable insights that will inspire you to be fearless in the pursuit of your dreams. Dear Readers, if it’s your first time here, welcome, and thanks for stopping by the JMS blog. FYI, JMS is a consulting firm located in Philadelphia that advises people and companies to manage risk and avoid organizational or fiscal paralysis. To that end, the JMS team is in the business of designing recovery plans as robust as possible that avoid behavioral or productivity inertia.
Therefore, this blog will help you make sense of these unprecedented times without feeling devoid of motivation and utterly defeated. You, Dear Readers, can find your groove again as soon as you get a handle on your money management, thanks to a well-thought-out strategy that lays out how to grow an emergency fund you can fall back on when facing the next crisis.
What is an emergency fund anyway?
Simply put, an emergency fund is your safety net to stay afloat as you work to overcome a momentary setback. You’ve lost your job with no notice. A painful toothache sends you running to the dentist only to find out that you need a root canal immediately. The car won’t start or stuck at the mechanic for extensive repairs, does that ring a bell? Enough said! These instances are the moments you wished you had an emergency stash of savings to come to the rescue.
Besides, the pandemic highlighted that expecting the government to come to our rescue promptly is a fallacy, even when officials forced you to close your small business and forbade you to leave your house. Consequently, Dear Readers, having an emergency fund is a matter of life or death! This blog insists that you must see the creation of such a safety net as a top priority in 2021.
Answer these two questions to start an emergency fund today.
What are your monthly expenses?
Personal finance professionals used to say that you need between three to six months of living expenses stashed in your emergency fund. This blog disagrees vehemently. Indeed, the JMS team believes that you need an entire year’s worth of saving to be fiscally responsible (especially if you are responsible for loved ones such as children or aging relatives). This is a stricter and more conservative standard because, as COVID-19 taught us all, crisis recovery always takes more time.
Dear Readers, you have to calculate a month’s worth of your living expenses and multiply that amount by 12. To determine what it takes to keep your household running for a month, you’ll need to identify how much you spend in the following categories: food, housing, utilities, transportation, and savings contributions. You’ll need to consult your budget or look at the credit card and bank statements of the last six months to have a clear picture of your monthly expenses.
You might want to try creating a monthly money routine with these three easy budget tips if you are overwhelmed.
Notice, Dear Readers, this blog did not mention variable expenses such as dining out, shopping, or memberships of your favorite pastimes. Thus, your monthly expenses are the bare-bone budget you keep running your household after losing all sources of income.
How do you get started?
The least painful path is to funnel your stimulus check into an account you opened for the sole purpose of creating an emergency fund. This avenue requires absolutely no sacrifice on your end except deferred compensation. To keep your emergency fund liquid and easily accessible, you can open another checking account at any banking institution or even online. You can also place your emergency fund in a low-risk, higher-yielding, and FDIC-insured account such as a money market one. To jump-start your research, Dear Readers, learn more here and use this locator to see what options are available where you live.
Otherwise, Dear Readers, you’ll have to find more money as you reevaluate your budget. In other words, you have to decide which of the variable expenses you are ready to cut. So listen, Dear Readers, life is about fighting for what you want. It is never easy but always rewarding. This blog won’t lie to you. Cutting variable expenses requires discipline. To build your emergency fund as quickly as possible, you’ll need to make regular contributions from as many sources as possible. For example, you might need to cut your cable bill or weekly take-outs, freeze monthly online subscriptions, and lose the gym membership. Thus, by compounding your variable expenses, Dear Readers, you can build the balance of a life-saving emergency fund faster.
Final thoughts.
There you have it! The JMS team thanks you, Dear Readers, for taking the time to read today’s publication. The branding24seven community is here to inspire and encourage as you, Dear Readers, are embarking on the exhilarating journey to design the life of your dreams. This blog wants you to have the confidence to chase your dreams with reckless abandon!
The JMS team thanks you for your support as you continue to submit requests by email or via the contact form. Don’t stop, Dear Readers! As a small consulting firm, the JMS team feels lucky to have the ability to support clients across industries through any given crisis that rocks their daily operations. We want to do the same for you, Dearest Readers. We love creating articles that make you think, question everything you thought you knew, and change your life! Come back every week for actionable tips to level up your time management skills and optimize your financial goals.
Dear Readers, we want to hear from you! Are you convinced that you need to start an emergency fund now? Did you like our solutions, or do you think that we missed the mark? What else can this blog cover that will help you optimize your financial goals in 2021, Dear Readers?
Let us know by email at jms@branding24seven.com or by mail at JMStrategy LLC
21 S. 11th Street, 2nd Floor, Philadelphia, PA, 19107.
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