Avoiding budget myths can help create emergency money
Budgeting can eliminate emergency money needs
Everyone is in search of emergency money. No one wants to get caught with a sudden hospital, automobile or appliance bill and have no way to pay for the expense. In today’s precarious financial climate, it’s crucial for everyone to find a way to bulk up their emergency funds. The best way to find extra money is to budget. It’s a great way to see where a consumer stands financially and see what he or she has to do to improve their situation. Budgets are useful tools that can be created with intricate software or a simple notebook.
Despite the necessity of a budget
Despite their importance, there are still some consumers making mistakes with them. Here are the top mistakes people make with their budgets.
1.) No budget. There is still a fraction of the population that doesn’t budget at all. Keeping track of monthly income and expenses can give a consumer a clear picture of how well, or not so well, money is working for them. For example, if a budget shows that a consumer is spending hundreds on clothing and dining in a month, that’s not a good use of cash. It would be better to scale back and fuel that money into either savings or investments.
2.) Lack of math skill. Too many people fall back on a lack of math skill as their reason to not have a budget. In today’s technological age, though, there is no reason to not have a budget. Software, from Microsoft’s Money to Quicken to lesser-known brands, can do the work of organizing a budget. All the user has to do is input their spending and income. The software does the rest. For those who want a very basic budget, a notebook and pen can do the trick, too. The only skill needed is consistency.
3.) Job security. There is also a growing number of consumers who believe that if their job is secure, they can count on money coming in and don’t need to budget. Whether a consumer is working for a huge corporation or a mom-and-pop business, they are at risk. The economy is very unstable and has been for over 12 months now. Though the recession is over, having a good emergency money fund was crucial to the survival of many Americans who were laid off unexpectedly. Employers are still holding back when it comes to raises, hiring and offering benefits and no one knows how long it will take for them to return to old ways of operating.
4.) Unemployment benefits are there. The reality of government-sponsored unemployment is that it is not completely reliable. If an employee leaves their job or gets fired, unemployment most likely won’t be approved. Plus, with the recession bringing the unemployment rate up to well-over 10%, the number of benefits going out is quickly draining the government-sponsored benefit plan.
5.) Not my job. No one anticipates tragedy like losing a job or an unmanageable emergency expense, but they do happen. The only way to mitigate them is to be prepared the best way possible, and that includes having a good working budget that is up to date. It also should be working for a consumer’s specific financial situation.
A difficult look at finances
In the end, a budget can save consumers from financial disaster. For anyone looking to bulk up their emergency money fund, it’s crucial to look at revenue and expenses and then make wise decisions based on the financial position. Much of saving can be done automatically due to banks setting up auto-transfers and shouldn’t be a task to remember. It may seem difficult to look at finances with a fine-toothed comb, but it is critical if liquid assets are to be built.