The first step on the path to material well-being – the creation of a certain cash reserve for a “rainy day”. Such a day may never come, but having a financial safety cushion required to every. Successful businessmen know how to quickly amass and properly dispose of safety capital. How to create a financial safety cushion for those who live from paycheck to paycheck or odd jobs on freelancing?
Financial safety cushion is designed to save its owner in a difficult period of life, when urgently needed money for treatment, cover damage from accident or fire, the loss of a major source of income and in other emergency situations. But the deferred money can bail out and positive aspects. Quit the hated job and start a new life will help financial safety cushion.
Accumulation is a psychological aspect. The person who has a financial cushion feels more confident, not afraid of life’s troubles, not fixated on money, ready for a change. His calmness and positive passed near, has a positive effect on work. It is noticed that the people who have the money for a “rainy day”, this day comes much less frequently.
How much money should be in financial cushion?
In order to determine the optimal size of the financial cushion, you need to calculate your spending for the month. They usually include utility payments, food expenses and household goods, journey costs and fuel private vehicles, the fee for communication services and the Internet, other monthly payments, for example, payment for a kindergarten or food for your pet. Here cumulative loan payments, if any. Depending on the number of family members and relationships between financial safety cushion may be General or for each to be calculated separately.
It is better to make two estimates: economical variant of the necessary expenses and the amount for a comfortable existence. Each of the resulting sums are multiplied by 6 months. This will be the limits of the financial safety net. In the first case it is the minimum size that will help to survive without debt even with the complete loss of income. Go beyond the limits of greater amounts is not recommended. The money should work and make a profit and not to lie dead weight. The financial cushion is not an investment portfolio, and insurance.
Creating and maintaining a financial cushion:
- To defer at least 10% of each of the received income;
- Do not store tools in a place where they are easy to take and to spend;
- Spend savings in case of emergency;
- Try not to devastate a financial cushion.
Where to keep a financial safety cushion?
Of all available storage options for the financial safety net is not suitable for everyone. Insurance reserve is created for a specific purpose, accordingly, the location and form of storage needs to meet certain requirements: not be too close to access does not depreciate over time, be able fast withdrawal.
Home storage in the form of cash can be immediately deleted. No financial cushion will not withstand the constant attacks, and the desire to lend oneself will certainly arise in such availability of money. Cash stored in your own home, you may find someone from the family and accidentally spend or someone deliberately steal. Bills may be lost in case of moving, fire or floods, including for which they were postponed. Home safe will solve a number of problems, but even in it for the money not immune from inflation.
Translation deferred money in gold, Antiques and other tangible assets – not the best choice for financial safety cushion. In this form, the funds will not lose its value, but rather as the years will increase it, but if it is necessary urgently to translate them back into cash to be problematic. – Deposit will have to rent a Bank cell, and this additional cost.
Money on Bank card are a better option, but not ideal. Inflation for such storage as ruthless, and the temptation to make a purchase online or to pay by card in store even a little less than with cash, but still too large. Servicing the Bank card minor, but it is. Of the advantages include protection of money from theft and other circumstances beyond the owner trouble.
A Bank Deposit is considered the optimal way of storing the financial safety net. On the one hand, the money is insured, even in bankruptcy or revocation of the license, on the other – the percentage of the contribution compensates for inflation. To spend funds from the Deposit when the momentary emotional impulse not so simple, which ensures additional safety. The only thing you should pay attention to is the choice of Deposit conditions, it needs to be replenished and have the possibility of early closure without loss of interest. With the accumulation of large financial cushion it is better to divide the amount into several deposits.
A lot of controversy is the currency in which you want to keep a financial safety cushion. Someone recommends domestic rubles, quite a few supporters of dollars or euros. Unambiguous answer to this question is no. Each option has its pros and cons. The situation with the exchange rate in our country is quite unstable, so decide at your own risk. It is more logical to rely on the currency in which you receive basic salary.