A number of households experience financial shock when certain monetary struggles just pop up in people’s lives. Even though they may have stable jobs, some people still find it hard to save money for their future, their bills, or cases of emergency situations.
To cover unwanted expenses, it is always necessary for people to use their checking or savings accounts. Instead of borrowing money from a number of people, maximizing the use of credit cards or cashing out retirement funds, people may try opening a home equity line of credit.
However, for those who want to make plans on how to use their money and allocate some of it for emergency funds, there are certain things that they can do.
CASH EMERGENCY FUNDS
As there are a lot of emergency situations that may pop up from time to time, it is always good to have cash on hand. Having a certain amount of money can also come in handy when stock markets start to decline.
MAKE ANOTHER SEPARATE BANK ACCOUNT
This involves opening another bank account other than the checking and savings account a person usually use. It also advisable not to apply for an ATM or debit card for such account.
AUTOMATIZATION MONEY TRANSFER
A person may choose automatic paycheck deposit for their salaries and they allocate certain amount to be transferred to various accounts or to the emergency fund account every month.
For those who are not in favor of automatic money transfer, may try saving money on their own at increasing increments every week.
ROTH IRA AS AN EMERGENCY FUND
Younger people are advised to invest in Roth IRA. Investing the maximum amount entitle them to use the money for their retirement but also use it in case of emergencies without any penalty.