Saving Money for Emergencies

Savings accounts are readily available at your banking institution and are great vehicles for saving money for a "rainy day" or for accumulating emergency funds. Most financial planners suggest that you keep 3-6 months of household expenses in these accounts, but individual situations will vary.

You may also want to invest in a money market account or fund to accumulate your emergency savings in. Most banks and credit unions, such as USAA, Navy Federal Credit Union, and Bank of America Military Bank have money market accounts available that pay a higher interest rate than normal savings accounts; however, there may be minimum balance requirements and check writing stipulations with these money market accounts. Mutual fund companies will also let you open an account with one of their money market funds. Typically, these accounts can be set up with check writing privileges just like normal savings accounts. A mutual fund company will also tend to pay higher rates of interest on their money market funds than do banks and credit unions. However, with a money market mutual fund, your deposits are not guaranteed by the Federal Deposit Insurance Corporation (FDIC) like they are with banks.

The bottom line is that you need to build up a substantial savings account so that you won't have to use credit cards to cover unexpected, infrequent, or emergency expenses. Whether you choose to put away 3 months or 6 months worth of household expenses in a savings account or money market account, you must commit yourself to only using it for emergencies!

Along with establishing an emergency fund, finding ways to make your dollars go further can help you to free up money that you can use to save for retirement college educations, vacations, etc. This may mean clipping coupons, buying things in bulk, finding bargains at auctions, becoming an avid reader of the classified section of your local paper, or using other money saving ideas.

A final word on saving money: In today's "I have to have it NOW" world, people are, all too often, buying things that they can't afford. Commercials and credit card companies have convinced us that we can "Charge It!" and pay for it later. However, buying things before we can afford them and running credit card balances is a HUGE barrier to our ability to build wealth through savings and investments. We firmly believe in "delayed gratification". That means saving for something that you want to buy instead of putting it on a credit card. You can even do something creative like create an "I want it" expense in your budget and allocate money to it on a monthly basis. Bottom line: Save and buy things

when you can afford them--never underestimate the power of cash!

Still need more information on saving money? Check out the articles and links below for more great home finance ideas and money saving tips!

Saving Money Articles

Saving Money by Managing It - by Chemain Evans - When it comes to managing finances, most people would probably receive an F. The truth is, many of us were never taught the basics of money, how it works, and how to handle it. View full article...

An Emergency Fund: Your First Line of Defense - by David Berky - Downsizing, rightsizing, forced retirement, layoffs, firings, outsourcing, and being made redundant. All could mean the same thing to you: financial catastrophe. View full article...

Wealth - 10 Basic Steps to Achieving It - by StartRunGrow - Make sure that you have some cash away in a savings account for your ... It may be a cash savings account, which will build up into an emergency fund to ... View full article...

Simple Tips on Saving - by John Mussi - Alternatively, you can make automatic current account withdrawals into a savings account. When you get a raise, save all or most of it. ... View full article...

Saving Money Links

SavingAdvice.com - A personal financial site that teaches you how to save. Exclusive money saving articles, discussion boards, tips, fun facts, quizzes and much more. We teach you how to save!

Saving Money and Living Debt Free - A friendly guide to saving money, cutting expenses, and getting out of debt.

Saving Your Way to Success - A very practical, motivational, no-nonsense resource web site and book, recommended to anyone wanting to enhance their money management and budgeting skills and attain their personal financial goals

More Personal Finance and Saving Links....