Financial Planning for an Emergency

In today’s economy proper planning for financial emergencies is incredibly important especially when the threat of losing your job seems to hang over everybody’s head like a guillotine just waiting to drop. The job market looks to be slowly stabilizing but unfortunately there is sure to be pain in the future for thousands of families as the loss of a job and income hit home. The initial shock of the loss of a job can be embarrassing as well as debilitating to someone as the reality of what has happened sets in especially as American’s since we place a value on ourselves based on what we do.

The most important thing for financial security is proper planning for the worst financial situation which would be the total loss of income. The step for planning for this scenario is very simple and obvious, save money. The debate among financial experts as to how much needs to be saved varies based on who you talk to, I believe it depends on your situation and how much you are making now. I have heard experts say to save anywhere from 30 days to 1 year worth of living expenses which depending on your current financial obligations can be very difficult to do. If you are on the lower end of the pay scale you would want to set a goal for 1 to 2 months because you can replace your income easier and are likely to be gainfully employed before a person in a higher income bracket. It also sets a little more realistic goal for someone that is living paycheck to paycheck because you can find a few things to cut out or cut down on in your weekly spending to begin saving. For those people that are in the middle and upper ends of the pay scale you should be saving more because your jobs will be fewer and far between in lean times and the income would be harder to replace. A goal of about 6 months expenses is a realistic goal and something that should be done to give you the extra time you will need to get your resume in the hands of hiring human resource departments.

Regardless of how much you make the goal is the same, to be able to have the emergency fund available to back you up and ease the sting of job loss. While you are planning and saving the important thing to consider is that the more debt you have the more you will need each month to get by so after getting some money saved you can take the amount that you were saving and start paying off those credit cards, car, and mortgage. After you get those debts paid off you will have some extra money to invest in your future for your children’s education and retirement which will get you prepared for the possibility that your Social Security check won’t be as big as you thought if it is still around at all.

People always save a significant amount of money as they know it would come in handy in emergency situations because no one knows what the future holds for us and PillarWM.com is an excellent platform to get the necessary tips on how to manage frugal expenses and keep spending in a safe manner without hampering monthly budgets.

Editor's choice