Family Budget - Budgeting Made Simple

Bugeting For Emergencies

Emergency funds are considered to be a necessity as far as financial security is concerned, since it can provide you and your family with financial resources that you can resort to and depend on when an emergency arises, such as illness, medical bills, or unexpected home or major car repair.

What happens if you don’t have an emergency fund in place?

You will be held responsible for the debt, whether it be a loan or on your credit card and the end result will be that it could take several years to repay with interest that will end up costing you so much more in the end.

However, by putting an extra thirty to fifty dollars every month in an individual “emergency savings account” you can be secure in knowing that you are prepared for any emergency that the future may bring. To make this easier on yourself just think of the emergency fund as an additional bill included in your budget that needs to be paid each month.

It is a very important to set up your budget, and allocate extra money for the family emergency fund. It is a very significant part of planning your family’s financial future. Keep in mind the goal is to create savings from budgeting your income. Ideally your goal should be to have your emergency savings fund
be equal to at least three months your living expenditures.

Another important thing to remember about your emergency savings fund besides putting funds into each month, is that it should only be used for actual emergencies and not that new pair of Italian shoes you think you’ll die without.

In spite of your financial status, the initial step in the process building your family emergency fund is by knowing exactly where all of your money is presently being spent.

When you determine where your earnings are being spent,then it will be easy for you to decide where to trim down expenses to create your emergency savings fund.

As we’ve talked about before budgeting is simply setting aside money for anticipated and unanticipated future use.

The amount saved from budgeting can either go to your savings goal, emergency fund or both. You can utilize the money saved from budgeting your families financial expenses by saving half of it to your savings account and half of it to your emergency fund. This way, you achieve your goals in savings and at the same time put in funds away for emergency use.

Tags: budget for emergency, emergency fund, family budgeting