Saturday, June 6, 2020

Financial Budgeting For Emergency Cases

Financial budgeting is being pro-active before the financial crisis strike. Long before you get into financial trouble, you set aside a financial solution for unforeseen events
. In other words, a financial budget means predicting your income and expenses on both a long-term and short-term basis and try to allocate sufficient funds over foreseeable expenses. 

Your accurate projections of the personal cash-flow will help you achieve your targets in the right way and also helps you swim smoothly over any financial storms. It's always wise thinking to hope for good but also prepare for worse.

“Take a lesson from the ants you lazy-bones. 
Learn from their ways and become wise. 
Though they have no prince or governor or ruler to make them work, 
they labor hard all summer, gathering food for the winter. “ 
Proverbs 6:6-8, NLT.

Emergency finances are thought to be an essential as far as financial security is concerned, as it may provide one with financial resources that one may resort to and depend upon when an emergency arises like when one is sick and have the burden of paying huge doctor's bills, or unforeseen house or major auto repair.

When one has no emergency fund, one may be obliged to get debt on a charge card that may take several years to pay back with interest that would later cost so much more. All the same by putting an extra $ 30 to $ 50 US dollars monthly, or higher amount depending on your affluence, in an individual “emergency savings account” one may be secured with what emergency the future might bring. 

In doing this, it's recommended that one sees the emergency fund as another bill, to be punctually paid monthly without default. The amount should be set aside before you start to spend your money.

Yes, one may and ought to budget and allocate the additional money for the emergency fund, as this is really important when one refers to his “financial future”. Here, the goal is to produce savings through budgeting your money; the emergency savings ought to ideally be equal to at least 3 or 6 months your living expenditures.

What's crucial is that you ought to steadily put a particular sum of money away, and only utilize it for true emergencies.

Not like an investment, the success of one’s long-run savings funds doesn't truly count on the amount of return or interests but on putting a fixed sum of money aside constantly and steadily so to have prompt access to it at all times.

Despite one’s financial status, the initial step in the process of building an emergency fund is by recognizing where your income is presently being used up or spent.

When one realizes and determines where one’s net income is spent, then it will be simple for one to pick and make a decision where to cut back expenses. Put differently, budget.

As said before, budgeting is putting or setting aside income for anticipated and unforeseen future utilization. It's here that one sets up a goal to save. So set an emergency fund as your goal.

“Don't store up treasures here on Earth, 
where moths eat them and rust destroys them, 
and where thieves break in and steal. 
Store your treasures in heaven, 
where moths and rust cannot destroy, and thieves do not break in and steal. 
Wherever your treasure is, there the desire of your heart will also be. “ 
Matthew 6:19-21, NLT.

Two Accounts: Savings And Emergency Fund

The amount saved from budgeting may either go to your savings goal, emergency fund, or both. One may use the money saved from budgeting financial expenses by saving one-half of it to your savings account and one-half of it for emergencies. This way, you accomplish your goals in savings and at the same time put in funds for emergency utilization.

Buy Life Insurance As A Safety Net

If you want to effectively leverage your contribution over pay-out benefits, then consider buying an insurance policy to cover your risks of financial loss. In essence, insurance is one of the rare contracts that promise to pay you a dollar for a penny, provided that some specified conditions are met. What you're doing when you buy insurance, is you transfer your risk to the insurance company which in turn accepts the obligation to cover your risk as a protection against loss after receiving your premium. 

Surely disaster will come just like the Sun will rise tomorrow. So when you have a valid insurance cover, it gives you peace of mind when you experience loss against the insured risk. You won't go mad like other uninsured people. when calamity hit the city.

In life insurance, for example, you can get insurance to cover even your income. When you suffer a disability, the insurance company will pay the same amount you were earning before the disability. Of course, if nothing bad happens, your premium payments are non-refundable. But the benefits of insurance indemnity, in my opinion, far outweigh the loss of small payment you make to validate your cover. It's wise to get insured.

Here's a video showing financial budgeting rule called 50/30/20 rule which you could start using immediately in managing your finances.



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​​Text Wisdom's mission is to provide an entertaining but faithful and objective exploration of the wisdom behind some popular text speeches like: "Less is more", or "Wisdom is better than strength" and "The pen is mightier than the sword" and so forth. We've committed ourselves to do that so that the readers of our site can appreciate and learn why they should become wise and be transformed to live their lives in all fullness. We strongly believe that wisdom, once gained, can help anyone attain any level of success in any situation. In an actual sense, we strive to live up to the Golden Rule that says: Do to others as you would like them to do to you. Similarly, the idea of what we try to accomplish is well-expressed in this biblical quote: “Be instructed, whatever be the cost, and you’ll gain what is better than gold.” Sirach 51:28, (New Community Bible). LM Edward is a university graduate with a keen interest in working hard to finding out a universal step-by-step method, if any, on how to become wise, and then share those findings to our curious worldwide visitors.

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