What Do Rich People Have That The Poor Does Not Have Apart From Money? The rich has money which the poor does not have but aside that, there are other urbane possessions of the rich that the poor don't have and I will just write on10 of such. The rich has money because they have learnt how to make money flow to them effortlessly but the poor would never know or do that These other urbane possessions of the rich include: 1. Wealth Mindset The rich has learnt that his mindset is everything and thus he guards jealously never allowing weeds and negative thoughts to live therein and making every effort to avoid the victim mentality. But the poor has accepted his condition as his fate and thus makes no efforts to extricate himself from the poverty pool. 2. Personal and Financial Discipline The rich has taught himself both physical and financial discipline. He does not speak out of tune, he has a cultured mannerism, is often courteous and humble. He also...
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Why You Need An Emergency Fund and How To Start One Today
If you want to learn how to
manage your money properly, start by setting up an emergency fund straight
away.
This blog post covers questions like,
"What is an emergency
fund?"
"How can I begin
accumulating an emergency fund?"
If you're in debt, do you
need an emergency fund?
How much liquid money can I
set aside for an emergency fund?
Where should your emergency
savings be kept?
Should I establish a
separate account for my emergency fund?
Isn't it possible for me to
merely use my credit/debit card as an emergency fund?
How can I put money aside
for an emergency fund?
The importance of today's post on emergency money stems from thinking about how you would manage various life events.
See, I believe that everyone should have an emergency fund. Many people, however, overlook this crucial aspect of financial management.
You can get into debt, add to your debt, not be able to afford basic living expenditures, and more if you don't have an emergency fund.
Living without some kind of emergency fund can be terrifying.
So, why are emergency finances necessary in the first place?
There are numerous reasons why you should have an emergency fund that is completely funded:
1. If you lose your job, an emergency fund can come in handy.
No matter how secure you
believe your employment is, there is always the possibility that something
unexpected will arise, necessitating financial assistance.
What would you do if you lost your work and didn't have any money set aside for an emergency?
2. If you don't have good health insurance, having an emergency fund is a good idea. You could have a medical emergency and end up paying hundreds or thousands of dollars out of pocket.
3. If you own a car, having an emergency fund is an excellent idea. You never know when anything might need to be fixed.
4. If you own a home, you should have an emergency fund. An unanticipated house repair is one of the fortunate things that homeowners frequently have to cope with. If your basement floods, or if a hole appears in your roof, having an emergency fund can help.
An emergency fund can also protect you in other ways.
This could be for a variety
of reasons,
a. such as an unexpected medical bill for your pet,
b. the need to take time off work for something,
c. the necessity to go a long distance to see someone who is ill, and
so on.
There are a variety of
reasons why you might require an emergency fund.
Emergency savings are always beneficial to have because they provide peace of mind in the event that something costly occurs in your life.
Rather than adding to your stress as a result of whatever has occurred, you may rest assured that you can pay your payments and focus on more important matters.
Today, I'll go over what an emergency fund is and why you should have one, how much money should be in your emergency fund if you're in debt, and where should it be kept?
What Is The Definition Of An Emergency Fund?
An emergency fund is money set aside in case anything unexpected occurs.
This could include paying expenses if you lose your job (or if your hours or income are reduced), paying for a car repair, a medical bill, or a broken window.
Is there anything that isn't an emergency?
A birthday present, a new television, a vacation, and so forth are not emergencies.
Your emergency savings account is designed to pay necessary expenses in the event of an unforeseen event.
It's a good idea to maintain an emergency fund because it can help you avoid unneeded debt.
There are far too many people who rely on their credit cards as an emergency fund, which is a bad notion.
Because of the high interest rates, this might cause your debt to spiral out of control.
If you're in debt, do you need an emergency fund? - Yes!
One of the numerous reasons why you need an emergency fund is that you may be in debt.
Even if you have debt, I still feel that you should maintain an emergency fund.
If you have debt, it is suggested that you have at least $1,000 in an emergency fund before beginning to pay it down.
After that, you must decide how much you are willing to spend.
You should still have an emergency fund if you're in debt since it protects you from taking on more debt and allows you to keep making your debt payments if something happens.
You've put in a lot of effort to get out of debt, and having an emergency fund can help you stay on track.
How much money can one put aside as an emergency fund?
Calculate your emergency fund.
“How much should be in an emergency fund?” is a question I frequently get.
The recommended amount for an emergency fund is determined by your unique circumstances.
There is no standard amount for an emergency fund that will work for everyone.
If you don't have any debt, I recommend setting aside three to six months' worth of spending.
And, yes, those are expenses, not earnings.
Some people, on the other
hand, put aside as much as a year's worth of costs in their emergency fund.
A 12-month emergency fund may seem excessive, but it all depends on your situation.
When making a decision on how much to put away in your emergency fund, consider the following factors:
1. Your job's long-term viability – If you are self-employed, work on a contract basis, or operate in a profession that is constantly changing, you may want a larger emergency fund.
2. Your income vs your expenses - If you have a lot of expenses, you'll need a larger emergency fund.
3. Someone without credit card debt, a mortgage, or a car loan, on the other hand, will likely require less in their emergency fund.
4. Whether you own a home or a car, you'll need additional cash on hand if something breaks or needs to be repaired.
5. Your well-being – A healthy person is less likely than a sick person to have high medical bills.
In general, the more "risky" your circumstance is, the larger your emergency fund should be.
You are the best judge of what is a good or risky financial condition, but you must be practical and recognize that what works for one person may not necessarily work for another.
Because we are self-employed, and for a variety of other reasons, I prefer to have one year's worth of costs saved.
However, I know a lot of folks who are content with a six-month emergency fund.
While the average person should have three to six months' worth of costs, it's critical to assess your unique circumstances and choose the appropriate amount.
I believe that the typical person should have some type of emergency fund.
Even if you can only afford $500 to $1,000 for the time being, it's better than nothing.
Although $500 to $1,000 will not cover the entire expense of your emergency, it will go a long way toward assisting you. Plus, if you've built up your emergency fund, you may still use it to pay off high-interest debt.
Where should your emergency savings be kept?
You might be unsure where to put your emergency savings.
Your emergency fund is
there for you to use when you need money quickly.
As a result, you'll want to keep your money in a location where you can readily access it. This implies that you do not want to be penalized for withdrawing funds. And you probably don't want to put it into a business or high risk investment (such as the stock market) as you don’t want to lose what you’ve saved for emergencies.
I like to put an emergency money in a high-yield savings account where you can earn a small amount of interest without doing any work.
High-yield savings accounts are a terrific way to increase your money, yet the majority of individuals keep their money in low-yielding accounts. Regrettably, this implies that many of you are missing out on some easy money!
Savings accounts at traditional banks are notorious for paying extremely low interest rates. This is because to their substantially greater overhead, which includes paying for the building, paying the tellers, and so on.
Because Betterment Everyday
is an online option, they can save money and pass the savings on to you.
To get started, create a
Betterment Everyday account.
Should I establish a separate account for my emergency fund?
You
don't want access to your emergency money to be too simple.
This
is because spending it would be far too simple. As a result, I propose that you
keep your emergency money separate from your regular spending account.
Some
people will simply create a new account with their current bank, while others
will open a new account with an entirely other bank to keep their emergency
savings.
This
is yet another instance where you must do what is best for you. It's fine if
you require some sort of barrier to access your emergency savings.
I'd
rather you knew that about yourself than risking your emergency fund on
something else.
Isn't
it possible for me to utilize my credit card as an emergency fund?
An
increasing number of people are using their credit or debit card as an
emergency fund. Some do it on their own volition, while others are forced to
use their credit card in an emergency because they do not have enough cash on
hand.
This is something that makes me feel uneasy. While credit cards may work for some, I feel that for the typical person, a more traditional emergency savings fund is a superior option.
Using a credit card for an emergency fund may be a bad choice if your circumstance is really dangerous.
This is because there's a good risk you'll rack up credit card debt that you won't be able to pay off whenever an emergency arises.
You'll be taking on a lot of danger if you rely only on a credit card emergency fund.
You never know when
something unexpected will arise, how significant the expense will be, or
whether you will have a sufficient credit limit to cover the expense.
Furthermore, your credit card's interest rate may be as high as 20% or higher, which might result in a hefty cost if you are unable to pay off your credit card debt before interest accrues.
There are times when utilizing a credit card to supplement your emergency savings stash is a good idea. Using your credit card as an emergency may not be a bad idea if you know you can pay off a large expense in one month, but you must keep in mind that you would not have to add another debt
The issue with this mindset is that what happens if you lose your job? Many people have emergency cash set up so that they can survive if they lose their work. What if you relied on credit cards for your primary source of income but lost it?
This could result in a
significant amount of credit card debt which could be out of your control
My concern with having credit cards as your primary source of emergency funds is that it can lead to further debt in some cases.
Sure, some people can make good use of their credit cards, but the average person will most likely need a reliable emergency fund.
My argument is that you should be honest with yourself so that you can avoid getting into trouble and prevent yourself from accumulating additional debt and even be in worse situation.
What is the best way for me to save enough money to fully fund my emergency fund?
After
reading everything above, I'm sure you're itching to start your own emergency
fund.
Putting together an emergency fund can be difficult at first, but everyone has to start somewhere.
Even if it's difficult, you'll be glad you're prepared for when you need money quickly.
If you wish to build an emergency fund, I recommend first setting up a separate savings account.
Then,
here are some options for getting started with an emergency fund:
1. Use your tax refund Well
Set a specific amount aside from each paycheck - Many employers can assist you in setting up automatic transfers into an emergency fund account.
2. Look for ways to supplement your income.
3. Begin a savings challenge - The $20 Savings Challenge is a terrific way to save $1,040 without even realizing it this year! All you have to do is save $20 per week for a year, and you'll have $1,040 in no time.
You'll have a large chunk of change if you start now and finish before the end of the year holidays!
Use a micro-savings software like Qapital — You can set triggers for saving, such as when you update your Facebook status, when the space station passes over your house, and so on. You can also make round-ups, set up automatic deposits, and more.
4. Reduce your spending and put the excess money into an emergency fund.
Is $1,000 in an emergency fund sufficient?
If you don't already have one, a $1,000 emergency fund is a good place to start.
However, you will most likely want to build on that in the future, as indicated above.
Don't be too worried if you're just starting out.
It's easy to feel like you'll never reach the required emergency fund amount if you're just getting started with your emergency fund. But don't let this make you feel dejected.
Everyone has to start from somewhere.
This month's $100 in your emergency fund will increase, and before you know it, you'll have saved $500, then $1,000. That's a whole lot better than having nothing at all. Then, once you've saved it, you can keep adding to it.
The majority of people believe that getting started is the most difficult aspect, and it is but then once you get the hang of it, you'd do it automatically and this I believe, is because you can see your progress and do everything you can to keep your money saved.
Must You Have An Emergency Fund?
Yes, you do require an emergency fund!
As you can see from the list above, there are numerous advantages to having an emergency fund.
So here are some questions for you
Have you put away some money for a rainy day?
If yes, Why?
If No, why not?
If yes, how many months' worth of costs are there in it?
#wealthisearned
About the Blog
Wealth Is Earned Blog is
owned by Topitup Media And Communication Nigeria whose Team Head is Dr. Jerry -
the First Oguzie: JP
At Wealth Is Earned Blog, we believe that being wealthy is a choice just as being poor irrespective of the circumstance and situation and it all streams from the mindset. Throw 2 men into the same gutter, the one with the wealth mindset will make it to the top while the one with the poverty mindset would be there and groveling with other inhabitants of the gutter - it is a mindset thing. God has given you the POWER to make wealth, it is your ABILITY to APPROPRATE what God has given you that makes the difference and it is wholly and entirely dependent on you
About Dr. Jerry - the First Oguzie: JP
Dr. Jerry - the First Oguzie is a Physician, an Author, a Writer, Thinker, Founder, Convener and Success Coaching addict. He is passionate about helping people become the best versions of themselves through coaching, mentoring, teaching, enlightening and enhancing their self worth. And the Platform he uses to reach out to people is his Ministry of Encouragement (MoE). He has deep interests in Personal Development including mindset reset and habit change, Personal Finance, Wealth Creation, Health and Fitness. He believes that financial knowledge (literacy) combined with self - discipline is the key to achieving financial freedom.
He is the author of ThePractical Steps To Total Financial Freedom -
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Morgan Oscar
ReplyDelete1. You must start by having a separate savings account.
2. *The nature of your job: if you have a job that pays you too little to be able to start up an emergency fund account, it becomes difficult to start saving up for emergencies but it is important that it should be done regardless.
*Your expenses against your income: No matter how much your job pays you, when you spend excessively without any proper caution, saving up for emergencies become difficult.
*Your health: it is important that proper health is guaranteed; but when you lack health insurance and you don't have anything saved up for emergencies, health issues might come up, making you dig into anything you planned to save up for emergencies thereby making it difficult have any other form of savings.
*The nature of you job: it is advisable to try and start up something little on the side apart from your job so as to help you make a little more which could cover up for your expenses and also help start up a savings account for emergencies, if you earn so little in your present job.
*Starting up: starting to save for emergencies can be difficult and discouraging but you must understand you don't have control of tomorrow so you have to be bold and disciplined enough to start saving.
3. *In case you lose your job suddenly, an emergency fund would come in handy to keep you afloat financially before you get a new job or balance financially
*Unexpected health issues can come up that need to be handled, without an emergency fund, it becomes difficult to handle such situations.
*Emergency funds can come in handy in times when you need to make a quick repair on your car, house or other properties of material importance.
*There are times when you need to either visit a family member or close friend that is ill or dead, or you need to take an important trip, it is not advisable to dig into money meant for other things; at times like this, emergency funds come in handy.
*When debts need to be paid and you don't have any other source; to avoid incurring more debts, emergency funds can be used to settle impending debts.
4. Yes. 3 months worth of spending.
5a. Yes, b. No, c. No, d. No, e. No, f. Yes, g. Yes, h. No, I. No.
Savings is the most important. A check on expenses is a huge factor and can contribute immensely.
ReplyDeleteLack of savings.
No income.
Low income.
Lack of knowledge of emergency fund and
Reckless expenditures.
I) It's always difficulty to save mostly when one is starting anew. For one to do that effectively, it has to be imbibed and become a culture. Savings culture is the best way to be wealthy.
ii) One cannot initiate an action when there is no means most times though we must always get started and that is the very essence and what this platform has ignited already. The best way to get started is against the odds is by having a positive mindset.
iii). A peasant income is sometimes unable to take care of the normal concurrent expenditures talk more of expanded savings as emergency.
iv). Knowledge was detailed in the Bible as the principal thing, and in all one has to acquire, that wisdom should be the ultimate. How can one do without knowing. I am even hearing emergency savings and how it is being used for the newest time. So, the lack of this knowledge is a militating factor.
v). Lack of discipline in expenditures is an inhibiting factor. Expenses must be articulate enough before it should be done, otherwise, it shouldn't be done.
Advantages of creating an emergency fund; Stability.
Repairs.
Public relations.
Health insurance and
Payment of debts if any.
I). If one looses a job, emergency fund keeps one afloat. It ensures stability going forward.
ii). Emergency repairs on properties such as building, car and more cannot be a thing of worry when this fund is readily available.
iii). Public relations can be maintained without stress; attend a friends wedding, burial and some attention of aids to one who needs one so dear.
iv). Certain health issues will be taken care off when such arises. This serves most times as replacement for health insurance.
v). To service a debt incurred becomes fun in this regard. This can elucidate ones desire to clear off/eliminate debts at ease.
NO. None yet.
I have heard it now. Sure, will switch to action immediately.
5a). YES. b). NO. c). NO. 3 months can get started though 1 year is a landmark. d). NO. e). NO f). YES. g).YES. h). NO. i). Yes. It can serve but not take its place entirely. j). YES.
KELLY
ReplyDelete1. The most important item in creating an emergency fund is opening a separate savings account for the purpose
2. 5 things that could constitute an impediment to creating an emergency fund:
(a) Low or little income. If you're not earning much starting an emergency fund can be a herculean task to carry out
(b) If your expenses are very high, excessive or reckless
(c) Losing your job without any other stream of income
(d) Lack of cash savings habit
(e) Reliance on credit card
3. 5 advantages of creating an emergency fund:
(a) Emergency fund comes handy if you lose your job
(b) If you don't have a good health insurance
(c) If you own a home and suddenly there are things to repair, fixed or renovate
(d) It provides peace of mind in the event that something costly occur in one's life.
(e) The need to take a time off work to do or carry out something
4. Yes..... 1yr 6months
5. (a) yes (b) no (c) no (d) no (e) no (f) yes (g) yes (h) no (i) yes (j) yes
1.The most important item in creating an emergency fund is OPENING A SEPARATE DEDICATED SAVINGS ACCOUNT !
ReplyDelete2.Five things that could create an impediment to creating emergency fund are :. A:*Absence of job*
B:*Poor income*
C:* Poor Health status *
D:* Poor Savings mindset*.
E:* Extravagant lifestyle*
(A) ABSENCE OF WORK/JOB: A man or woman who doesn't have a steady job or work will have a hell of trouble saving not to talk of creating an emergency fund.
(B) POOR INCOME : Likewise, if one does not make enough money to cater for his daily needs, it is unlikely that creating an emergency fund will be a priority to him.
(C) POOR HEALTH STATUS: A sick man already has a challenge that creating an emergency fund will not be so easy.
(D) POOR SAVINGS MINDSET: A man who has poor savings Mindset will find it difficult to create an emergency funds irrespective of the person's income.
(E) EXTRAVAGANT LIFESTYLE: People who indulge in the above habit live paycheck to paycheck and are likely to spend more than they earn thus creating an emergency fund will be a Herculean task.
3.Five advantages of creating an emergency fund are:
(A) Emergency fund can be a saviour If one loses one's job.The shock that comes with sudden loss of a job could be absorbed if one has an emergency fund. Reason being that this kind of shock can give some people heart attack that may ultimately lead to sudden death.
(B) Emergency fund can act as a kind of health insurance if one doesn't have a good health insurance because paying out of pocket can injure ones purse but an emergency fund could come to the rescue.
(C) Emergency fund can save one unexpected expenses that could arise due to break down of one's car for car owners which happens often and unannounced.
(D) Expenses that could arise due to unforeseen circumstances could be taken care of by emergency fund eg leaky roof or basement floods.
(E)Having emergency fund can give peace of mind ! In Igbo, we say Wealth makes the heart to be strong and healthy knowing that any eventuality that is financially related could be taken care of with ease.
4.Have not even thought of this nomenclature 'emergency fund'. But I have a savings account that I do not touch anyhow. I will now dedicate it as an emergency fund. For now , I have put away about three months expenses in it but will now strive to grow it up to six months at least !
5. (a) Yes, everyone should have an emergency fund to take care of emergencies for the rainy day because emergencies come in the form of unforseen circumstances.
(b) No.
(c)No, the minimum number of months for an emergency fund should be at least 3 to 6months.
(d)No, everybody needs to set up an emergency fund.
(e)No, the earlier one sets up an emergency fund before marriage the better.
(f)Yes, it's better to have a separate bank account for the emergency fund.
(g)Yes.
(h)No,but is advisable to start an emergency fund even if one has debts.
(I))Yes, Emergency fund can take the place of health insurance.
(j)Yes, the best time to start an emergency fund is now !
1.The most crucial item in creating an emergency fund is opening a seperate savings account. 2.Loss of job:An emergency can save you from a lot of stress when you loss your job .W
ReplyDelete1. As the name suggests, I think it is being able to have a special account where funds for emergency could be saved for urgent needs.
ReplyDelete2a. Debt Extravagant expenses.
b.Lack of self control c.Lackof planning, d.Multiple accounts
3a. It creates self confidence,
b.Avoid being under pressure,
c.Reduce unnecessary expenses,
d.Unstable health challenge
e.Lack of job security
4. Yes, I have set up emergency fund but not really on monthly expenses. I was able to deprive myself of some pleasure that could be avoided. I also save part or my unexpected cash flow during the course of the day, week or month as the case maybe.
5a.Yes
b.No
c.No
d.No
e.No
f.Yes
g.Yes
h.No (It depends though, it can vary depending on what one wants to achieve)
i.Yes
j.Yes
Good to read this
Delete1. Setting up a separate savings account.
ReplyDelete2. A. Relying on credit card
B. Being in debt
C. Being overclouded by expenses
D. Lack of discipline
E. Lack of interest.
3. A. It helps you in to clear your debt
B. It helps you to do repairs if you have a car
C. It helps you do repairs if you own a house
D. It comes in handy during health challenges if you don't have a good Health Insurance plan.
E. It could help you go for vacations, get birthday present etc.
4. Yes, I don't calculate by monthly expenses.
5. A. Yes
B. Yes only if the old one spoilt abruptly.
C.No
D. No
E. No
F. Yes
G. Yes
H. No
I. No.... getting a health insurance is best because there are some health challenges which can swallow up all your emergency funds leaving one stranded.