Originally appeared in Your Tango, Article published in August 2015 and reposted in February 2017.
Life is full of unforeseen twists and turns. You plan for something, and the exact opposite happens to you.
Money problems can arise at any time. Sometimes when you least expect it. Expenses like school tuition, groceries, credit card, and utility bills are foreseeable. However, unfortunate events like storm damage to house, an accident, a serious health issue, or getting laid off from job can pounce upon you rather unexpectedly, and you get caught in debt trap if you lack any backup.
This is where the concept of an emergency fund comes in…
An emergency fund is something that is essential to all of us, but unfortunately, many of us don’t possess it.
And even if we do, many of us have no idea about the right figure.
Today I’m going to share the necessity of an emergency fund, how much you actually need, and how an emergency fund can help your financial vehicle run steady.
PS: The suggestions may not work for everyone.
There are two types of people when it comes to saving money – one those who save, another who don’t.
If you fall in the second group, or somewhere in between, don’t worry. You’re not alone. There are millions like you, and I can totally relate.
I wasn’t focused towards saving a few years back. I was living from paycheck-to-paycheck and used to splurge a lot. I never gave saving a priority, lived under the wrong notion that I was making enough, and hoped everything would be just fine.
My credit card, student loan, and other debt levels had reached such a height that it became impossible for me to fight back. And that resulted in filing bankruptcy for a fresh start in 2013.
After that, I vowed that I’d never get in trouble with unprecedented debt burdens again. Also, I made saving a priority, and when I started, I realized I too could.
But I had no figure in mind as in what would be a substantial emergency fund. But I was not alone.
Let me give you some shocking figures. 63% of Americans don’t have enough savings to cover a $500 emergency, and 66 million Americans have no emergency savings.
According to another study by Neighbor Works America, one in four people would run out of money within 30 days if the paychecks stop coming in.
Do you fall in any of these categories ?
Why is an emergency fund necessary?
If you fall in any of these categories, then it’s certain that you don’t have an emergency fund.
Technically, if you have an emergency fund, it means you’ve got some substantial amount as spare money to cover any shocking expense that comes by. And if I’m calling it spare money, it means that it’s sitting someplace safe and you’re not touching it – unless a crisis turns up. Also, you’re meeting all your daily needs (including your debt payments) using another pot of money.
Having an emergency fund in place always helps you go ahead with your financial plans and prevents setbacks from taking place.
Also, it gives you a sense of security. You can live in peace if you know that you’ve got some kind of defenses for the unforeseen.
If your car breaks down, or you break your leg while coming downstairs, you won’t have trouble paying for the deductible either. Just imagine the satisfaction you get when you fight such a situation without a credit card.
If you have never had any savings before, then it’s high time for you to have some. Even if you’re able to put aside $100, I’m sure it’s going to boost your morale and help you sleep better at nights knowing that at least you got something.
How much do you actually need?
Trust me, there is no hard and fast rule as in how much emergency fund is sufficient. It all depends on your income, expenses, lifestyle, needs, and stuff like that.
The bigger you got, the better position you’re in.
Industry experts suggest that you keep aside at least 3-6 months living expenses as an emergency funds. And I believe it’s pretty decent as if life throws the ugliest surprises (such as a job loss), you’ll be better prepared to deal with those.
But if you’ve been a non-saver so far, snowballing such a figure seems to be quite intimidating.
Let’s say your monthly living expenses are $5,000. If we multiply this figure with 3 or 6, we get $15,000 and $30,000.
That’s a lot, right? Especially, when you’re starting from ZERO.
If you’re trying to dig your way out of debt, an emergency fund might the best possible alternative you’ve got.
You’re the best person to decide the amount suitable for the purpose. Though most financial experts would recommend something about $1,000, I would suggest that you try to amass anything beyond that, and if possible a figure close to $5,000.
And if you’re a saver, I’m sure you’ve already got that amount. So what do you do now? You keep on building the fund.
Since my bankruptcy filing in 2013, I’ve built up my savings to $32,000. At times, we wanted to use some of the money to pay off few debts. But we didn’t find it right to taking it below $5,000.
If you’ve never had any savings, start small, but start today. And eventually, build from there. Make sure you don’t touch it for smaller hurdles.
Once you grow it to a reasonable level and pay-off all your unsecured debt, keep on building it and don’t stop until it reaches three to six months of expenses.
Now I’d love to hear from you. Let me know your thoughts on this.
Andy Masaki is a blogger at Penny Less Dad and financial writer associated with the Oak View Law Group. He is a debt expert and a member of several online forums where he shares his advice as well as tips to lead a financially independent life.
Keep your love alive (and chocolate on hand) all year long.
Valentine’s day is only 24 hours, once a year – so how do you keep the love growing in your relationship year round? It takes some work and it’s not always easy especially when you are tired and had a busy day. But imagine a relationship where real connection, chocolate, and love notes are common, not the exception.
Here are the top 15 ways to keep your love alive and make it even better after Valentine’s Day:
We would love to hear other great ideas so jot them in the comments section below….let’s make our relationships great this year!!
- Don’t pet your dog first – How many times do you walk in the house and your dog gets a kiss and smooch before your spouse does? Be sure to greet your loved one first, before the kids, before the dog or before you get a snack.
- Get rid of the mess – who likes to come home to a messy home? No one! Taking a few extra minutes to make things nice and tidy for your spouse. Doing this oozes with “I am ready for you to be home”. And this works for him or for her.
- Flowers aren’t just for special occasions – Not everyone loves flowers but most do and we don’t know a guy who wouldn’t love a balloon bouquet with a love note attached!
- Surprise, Surprise – Keep the element of surprise alive. A new place for dinner, a surprise camping trip, a room cleaned out, a garage newly organized, taking the kids for an hour or two of “free time”, a back massage. Keep the element of surprise alive in your relationship.
- Consistent date nights – We can not express enough how important this is. Even when Bethany went through her cancer journey we still took one time a week where we went out, just the two of us. Once a week – that’s right, keep it consistent. (Or as consistent as you can.) Your kids need to see your love grow and the only way for love to grow is if you spend time together. Believe it or not it makes your kids feel safe, knowing that mom and dad love to spend time together!!
- Love notes – Make it a goal to send at least 1 love note a week. Either through a text, note on the mirror or letter on their steering wheel. Try a theme to the notes like, “52 wonderful memories I have with you”, or “52 reasons I love you”!
- Invest in your relationship – Don’t let this year go by without going to a marriage seminar, class, or retreat. These programs are designed to bring you closer together.
- Get a Ph.D. on your spouse – Make it a goal to learn everything there is to know about your spouse. Be inquisitive. Know their love languages, their favorite color, their favorite candy and of course their 2 Money Personalities . (click here for access to the free Money Personality Assessment).
- No more “yes dear” – Don’t pacify your spouse. It isn’t nice and it doesn’t help with your connection. If you don’t understand where your spouse is coming from–ask questions. If you can’t finish a job for your spouse then tell him/her you can’t and when you do plan to finish it.
- Defend each other – We all need to know our spouse “has our back”. Defend with love and honor.
- Brag about your spouse – Once a week, either to a friend or colleague be sure to brag about your spouse. It will come back to your spouse and boy does that feel good!
- Refuse comparisons – The grass is always greener on the other side – another person may have shinier hair, or longer legs or a thinner waistline. Make a conscious decision not to compare. You found the love of your life, don’t forget it.
- Great eye contact – Nothing says, “I care” more then great eye contact. Nothing says, “You don’t matter” more then wondering eyes. When your spouse speaks, listen, and give the gift of great eye contact.
- Start and end each day holding hands – Ahhhh, how sweet is that? Be one of those couples that you see who really love each other after 50 years of marriage – take each others hands and say, “I love you” or “thank you for doing the dishes” or if appropriate….hold hands and pray together.
- Don’t raise your voice – Who likes to be yelled at? No one. Just don’t do it. The dog doesn’t like it, and neither does your partner. Shelve the shouting.
Have a Happy Valentine’s Day, all year long.
Scott & Bethany Palmer, The Money Couple, are financial planners, authors, and speakers who help couples tackle money issues in their relationship. Grab a copy of “The 5 Money Personalities: Speaking the Same Love and Money Language,” and take the FREE online Money Personality Assessment.
Originally appeared in Your Tango
Did you know that about one third of New Year’s resolutions are about finances?
And we all know the sad statistics for how often resolutions are kept. Hardly ever.
So this year we decided to create 5 New Year, New Money You challenges to make your money management more exciting and more successful.
Check out our guest appearance on the Everyday Show when we shared the first two challenges! You won’t want to miss it!
Challenge #1 Get a Money App
There are lots of apps out there and most of them are free. One we really love is called Quapital! If you purchase something for $2.50 it will round up to $3 and take that difference and stick it in a savings account for you! The average savings is about $44 a month. If you do that for a full year you will have saved about $550, which could be your whole Christmas budget, and it didn’t even hurt!
Some other great apps are MINT and Quick Books! Check those out for personal budgets, and small business management.
Challenge #2 Invest
Choose one of these three to begin.
Invest in Your Future
This is something we are usually really bad at, but the easiest way to do that is using a 401(k) or 403(b) through your employer. Nine out of ten of those have a matching plan so GO DO IT! I was a stay at home dad for seven years so Beth used the 403(b) at our organization while I was at home. Now we both use ours. It is great because it is 100% return on your money. Most companies will match a percentage: 3, 4, 5, or even as high as 6%.
If you can put in 3% and get another 3%, why wouldn’t you do that? I have been in investment advisory for 20 years and I can’t find an investment out there that provides 100% return, so USE IT! If you don’t have one of those use an IRA or a Roth. Just put $50 away a month. It doesn’t have to be this huge amount, just start.
Invest in Your Education
One of the things we are horrible at is continuing to keep ourselves educated. For me as a financial advisor, I have to take continuing education courses, but not every occupation requires it. So you need a little extra nudge. So jump into a community college class or find something online!
How about a class from the world-renown Massachusetts Institute of Technology? They offer all kinds of FREE classes through their MIT OpenCourseWare site – just sign up. Plus you can tell your friends you’re “going to MIT”. Go, invest in your education!
Invest in Yourself
Again, just pick somewhere to start! Get that gym membership, start a home brewing system, take a class, explore the time savings of a virtual assistant or maid, upgrade your look with a new wardrobe or hairstyle, take a floral arranging class, or find a knowledgeable counselor to help you get to that next level this year. Do something that you can really enjoy in 2017.
From the famous “philosopher” Ferris Bueller, “Life moves pretty fast. If you don’t stop and look around once in a while, you could miss it.”
Don’t miss it!
Make it Happen.
Scott & Bethany Palmer
The Money Couple
You made it!
You made it all the way to the New Year, New “Money You” Challenge #5!
Pat yourself on the pocketbook.
And for Challenge #5 consider: who can you help this year?
After a rough year financially, when you can only donate a little, is it better to wait until next year when, maybe, you can give a lot?
We would challenge you to find some portion of your finances to give to a worthy cause, this year. Your final New Year, New Money You Challenge is to choose a charity and donate to help their good work. Does this mean you have to write some crazy, big check? No. Although, we are sure they would accept it. Just give generously and from your heart.
Imagine someone in need, opening your financial gift as if they discovered it wrapped with a big bow and note just for them. Explain to your children how this gift, and the sacrifice you make in giving it, will help others in need.
You are diligent in taking steps to improve your money and your relationships. And now that effort will extend beyond the walls of your home.
Thank you! And well done!
Congratulations on the challenges you conquered to make this year, the best year ever.
Need to catch up?
“Then give to the world the best you have. And the best will come back to you.” Madeline Bridges
Keep up the good work!
Make it Happen!
Scott & Bethany Palmer
The Money Couple
P.S. Did you skip a challenge? No worries. Take some time today to make it happen.
Can Dreams Improve Your Relationship? Check Out New Year, New Money You Challenge #4
Before we dive into Challenge #4 …
Have you heard someone say they are adding something to their “bucket list”?
Don’t think big, orange bucket that smells like hamster cage. A bucket list is a compilation of activities a person wants to do before they die.
Why is it called a “bucket list”?
Well, we had to look it up.
Apparently the list contains items to accomplish or see or experience before one “kicks the bucket”. Ugh. Okay. Not a happy visual, but a good idea.
Research shows actually writing down something you’d like to accomplish makes you 80% more likely to do it.
So our New Year, New Money You Challenge #4 is make a dream list. No bucket needed. We recommend you and your spouse pick 3 money dreams for this year. Three things you would like your money to accomplish for you in the next 365 days.
It can be three small things or one big thing and two small, or any combination that makes your day “in the trenches” seem more worthwhile.
- Sign up for the class you have been wanting to take
- Take your kids out individually, each month
- Go on a vacation together
- Paint your house
- Read a motivational book each month
- Sponsor a child
- Save money
Let your mind DREAM and DREAM Big!
Write those 3 money goals on sticky notes for the mirror, the fridge, or your car. Or put those 3 items on a monthly or weekly reminder on your phone’s calendar. Whatever it takes to keep the goals in front of you.
You work hard for your money; make sure this year it works hard for you.
Make it Happen!
Scott & Bethany Palmer
The Money Couple
You are remarkable!
Not everyone makes it to Challenge #3.
You take the time to make a better life.
Not a perfect life. A better life.
You’re ready for Challenge #3.
Most people let their finances boss them around like a grouchy toddler on a sugar high. But you are taking steps to improve your finances and your relationships.
Our New Year, New Money You Challenge #3 is perfect for someone like you. It’s not flashy or earth shattering, but it’s important.
Challenge #3 is to “get real with what’s real”.
Take a little time to evaluate last year.
To make this challenge a little easier, here is a checklist:
- Savings for current needs – Did you get off course? What caused you to get off course? Your rainy day fund?
- Savings for your future – Did you add some to a 401(k)? College savings? Or retirement savings?
- Debt – Did your debt decrease? Increase? By how much?
- Spending – Are you an “oober saver”? – Did you make a “spending goal”?
- Memories – Did you make some great memories?
- Charity/Church – Did you feel good about the contributions you made to your church and/or charity last year? What is going to be different this year?
Take some dedicated time to evaluate the progress you made and note any rabbit trails or not-so-great facets of your last year’s finances.
Celebrate—your steps toward a better life.
Recalibrate—your missteps for a better year, this year.
Need to catch up on Challenges #1 and #2?
The steps you take, no matter how big, matter.
Make it Happen!
Scott & Bethany Palmer
The Money Couple
Challenge #2. The Next Steps to Investing in Your Best Year Ever.
Are you having an “APPy New Year”?
Remember Challenge #1? – Start the New Year off with a new money app.
We want you to be APPy!
Most apps are free and help you create a hassle-free budget, track travel expenses, send money, or manage your household finances.
You can catch up on Challenge #1 and jump right into Challenge #2….you can do this… welcome to the best Money You Year Ever!
CHALLENGE #2: INVESTING (it’s easier than you think.)
Do you have a “Negative Nelly” in your life?
Someone who always seems to have something negative to share?
Our Negative Nelly stopped us in the neighborhood the other day and said, “New Year’s a-coming! Another year older! Not getting any younger!”
The guy should work for Hallmark.
But when we got home, Bethany said, “You know, I hate to admit it, but he’s right. We won’t live this year again, and we aren’t getting any younger.”
Now, Bethany mentioned the passing of the year with a twinkle in her eye because that’s who she is. She’s eternally positive, and she doesn’t like to waste a minute! She sees the passing year as a challenge, a reminder that we what do with this day matters.
So challenge #2 of the New Year, “New Money You” challenge is: invest.
Invest today—right now– for a better future.
Pick one of these areas to invest in:
- Your Future
- Your education
- Your savings for something BIG
- If you have a retirement plan at work – run to your HR department and get the forms to increase your contribution at least to the match. Do it!
- Start an automatic savings plan – start with as little or a lot each month and have it automatically swept into your savings
- Try and app like Qapital – every time you purchase something it will take the “round up” to the nearest dollar and stick that in savings
- Look into a section 529 savings plan – a good option to grow your college savings tax free.
- Sign up for an online class today – If you want an education you have got to go get it. My (Bethany’s) grandmother, “Grams” use to say, “Education can never be taken away from you”.
- Make sure you and your spouse agree on how much you will contribute towards your children’s college or agree on if you will at all.
Your Savings for something BIG!
- You often say, “If only I could get…..” – not this year! Start imagining that something special in your life and start saving for it today.
- Chunk the cost down into bite-sized pieces and get to work.
- You can do this. This is your year!!!
Don’t forget about investing in your local church and/or charity. Giving is such a great way to make your year great too!
Remember…..you don’t need a million dollars to get started. We have a friend who loves Loyal3, an online investment site that allows her to buy fee-free stocks like, Amazon, McDonald’s, Netflix, etc. in $10 increments. The popular app, Stash, let’s you start investing with only $5.
Invest today. Start your nest egg growing – today.
You will feel better and you’ll have something positive to share with Negative Nelly next time you pass.
Make it Happen,
Scott & Bethany Palmer
The Money Couple
Stop Waiting. Today’s The Day. “New Money You” Challenge #1
Are you ready for the best “Money You” year ever?
Start your year off right.
(Don’t worry if it’s not January 1! Plenty of large corporations run their fiscal year counter to the calendar year. Now you do too!)
CHALLENGE #1 — APPy New Year!
Start 2017 off with a new money app.
Mostly free, money apps make life easier and manage the boring details.
We know you are saying, “I don’t even know where to start”. Here is where the challenge comes in….just….START! If you don’t have any money apps, get one, if you have one, get another.
Here are a few money apps we love:
- Create a budget hassle-free — Mint
- Track a project or travel expenses – Wally
- Send money or share expenses – Venmo
- Manage household or business expenses – Quickbooks
- Save money painlessly – Qapital
- There are tons of apps out there. Find the one that helps you where you need it most. Don’t let the billions of apps or your finances overwhelm you.
“When eating an elephant take one bite at a time.” U.S. General Creighton Abrams
Take a nibble here and a nibble there.
To help encourage your “money-munching”, we’d like to suggest 5 New Year, New Money You challenges–little bites you can take to start your financial year off right. Here’s to checking #1 one of the list. (Watch for #2.)
APPy New Year to you!
Make it Happen,
Scott & Bethany Palmer
The Money Couple
Every year people make New Year’s Resolutions. The third most common resolution is to spend less and save more. However, only 10% actually keep that resolution.
So the question is, “Should you even try to make financial resolutions?”
We say, “Absolutely!”
Here are three tips to keep your resolutions and make your New Year, New “Money You” shine in 2017!
First, start with REASONABLE financial goals. Most people tend to say, “I want to be completely out of debt by June!” and then June rolls around and you are have paid off about 1/10th of that. When resolutions are unreasonable you can understand why only 8% of people accurately accomplish any New Year’s Resolutions. You could, make a reasonable goal to pay down may 25% of that debt each quarter or pay off half this year and half next year. It should be reasonable and obtainable where you can actually get some forward momentum.
Second, make your money list. There are four main areas to concentrate on making SMALL SHORT goals: insurance, taxes, investments, and retirement.
• Insurance: Shop rates. Are you paying more than you need to?
• Taxes: Start sooner. If you always wait until the last minute, make a goal to get them done early in 2017.
• Investments: If you are currently putting away $0, make a goal to put away something. Shoot for $50-100 a month.
• Retirement: Get real and see what you will really need. Check out this online calculator as a good place to start.
Third, make one BHAG, Big Harry Audacious Goal! You just have to have one! Here is our BHAG this year. We bought a car and put half down and then financed the other half. Our BHAG is to pay the other half off this year. If it happens, we will feel awesome, like rockstars!! But, if it doesn’t happen it’s not going to ruin the Palmers’ financial situation. Swing for the fence.