Unexpected expenditures are among the most prominent things that cause debts to accumulate and make them unmanageable, as there are some real emergencies, so that a person cannot act without spending money.
These types of emergency expenditures tend to be large, and being unpredictable, most people do not have the funds allocated to deal with them, and for this reason it is very important to consider the need to establish an emergency savings fund, and thus credit cards will not be necessary to overcome crises. The future, according to the nonprofit "Credit.org", which specializes in providing financial advice, which provided seven important guidelines for the establishment of a debt relief fund in the future, is as follows:
Continuity
The individual must have a fixed deposit in his or her emergency fund. The amount does not matter as much as the continuity of saving, the important thing is to keep as much money as possible that can be set aside at the end of each month, instead of paying the debt fees it can be directed to the fund.
Automatic
The best way to ensure the consistency of monthly savings deposits is to make them automatic, by setting up an automatic transfer every month, so that a percentage of the income goes directly to savings, so it cannot be forgotten and you will not encourage individuals to spend it.
If the individual is still working on paying credit cards or other debts, it is best to wait for savings after this is done, but a small amount must be saved, even during the payment of debts, until it turns into a habit that is difficult to abandon, and the fund allocations can be increased once the obligations are cleared.
budget
Most people feel that there is not enough room to allocate money for savings, but by creating a budget, there is always a way to act by tracking spending for a month. The individual will reveal spending categories, strengths and weaknesses. The goal is to save as much as possible, after which the contribution of savings can be increased over time.
Sums
During savings, individuals will need to set some target amounts first, the first savings goal must be manageable, and the standard advice is to provide up to three to nine months of income in an emergency savings fund, to overcome job loss or other income loss.
Additional income
The extra money that individuals receive is a different way of looking, as many people treat additional and unexpected income as a license to spend. This may be wasting great opportunities in the framework of savings efforts, as saving this kind of sudden profits, regardless of its size, will facilitate the money management process.
Act wisely
Remember that emergencies are unpredictable, as vacations, events and gifts are not contingencies, in contrast to job loss, or medical expenses, and one of the smart methods may be to place emergency savings in an accessible account, but that may not be appropriate Highly motivated person.
Keep saving
Even after achieving the goal and obtaining savings of three to nine months, savings should be continued, at which time it is possible to start setting greater savings goals, such as arranging a down payment for a home or university fund for children, and it can also be used in several areas without the need to depend On credit card debt.