Technically, we are not out of lesson 2. Budgeting is a weekly task. This is something that we will constantly be looking at. There will always be ways we can tweak this and adjust for current situations.
Today, we focus on saving. Now that we know where our money is going we can find ways to improve our situation. This is a simple step, but it’s not easy. The type of savings and how much is up to you.
Part of savings is to pay off your current debt. If that debt persists, you will never truly have money saved. That cloud will always be there hovering over you.
It does sound backward to save while paying off debts but hear me out. The goal we have is to set up a safety net. This is in the form of an emergency fund. This is typically in a savings account or somewhere you can easily access and is a stable investment. Personally, I choose the savings account even though it does accrue interest at a slower rate.
The emergency fund is for exactly what it sounds like. If there is a loss of employment, if you need some quick transportation, or anything that would hamper your current living situation. This is a stash of money that will get you back to your status quo as soon as possible. Experts recommend 3-6 months worth of bills.
This is tough, but anyone can manage it. The emergency fund will start out small and it may feel like it’s not growing, but it is there. This is true with all types of savings. Even if you don’t see it on a day-to-day basis, you will be shocked with where you can be in a few months.
I am continuing on with this step and will update you with further lessons as I continue to grow my savings. In the meantime, watch out for some special project that is already in the works.