Save for the Rainy Day and Invest in the Future

You begin getting a control on your finances and the car starts a weird clinking or banging noise. If it’s not the car then perhaps a pipe bursts in your home. Whatever the emergency, if you haven’t been saving for a rainy day, the stress of the problem is compounded by the stress of how you are going to pay for it. Do not wait until you are deep in debt or completely out of debt in order to start saving for the rainy day. Personal finance includes creating a financial cushion so that one emergency doesn’t send your entire life into a tailspin.

The best way to start saving is to designate a certain amount each pay period to go into savings.  This can be as much as $100+ per month or as little at $10.

The goal is to reach a minimum of $1000 in a savings account. If you are worried about job security at all then you can never have a large enough emergency fund. The recommended amount is whatever it would take to pay up to six months of your bills in case of a sudden job loss or medical hardship. If you do not think that you have the extra money every month, consider that $3.00+ coffee you get every day or the money you spend attacking the vending machine at work. Did you realize that if you spend $3.00 a day on coffee, five days a week, that equals $60 a month. If you eat lunch out five days a week and spend $7.00 a day you are spending $140 a month which is a perfect amount to start saving. Try taking your lunch to work.

Once you have your rainy day fund you should consider investing money to help add to your personal finance cushion. The type of investing you do will depend on your level of expertise and the expertise of those around you. The easiest form of investing is an interest-building savings account which actually aids your desire to build an emergency fund. If you are ready to move into the world of stocks, bonds and mutual funds then you need to do your homework. Your personal finance goals should be taken into consideration when deciding what type of investments to put your money in.

Make a list of what you are saving money for. This includes things like your kid’s college education, your retirement, a new home, or a new car. Once you have the list, it is time to make a plan.  Do not let technical investing money terms such as dividends, mutual funds and annuities deter you from jumping into the best possible way for you to meet your personal finance needs.