By Kris Miller
In addition to saving for your future, smart women put money aside in an emergency fund—an account you can access at anytime for any of life’s emergencies, including unemployment, sickness, injury, etc. Ideally, this fund will have enough money to support you for anywhere from six months to one year.
Of course, saving a year’s worth of income can be difficult, especially when times are tight. But think of it this way: If you allocate 10% of your gross income into your emergency fund, you’d have a year’s worth of reserves saved in just ten months.
You can likely save even more if you analyze your monthly budget. If you’re like most people, you probably are paying for things that you never or rarely use—things like gym memberships you don’t take advantage of, subscriptions to magazine you never read, expanded cable channels you never watch…you get the idea. See what you can cut from your budget and then divert that money to your emergency fund.
If you can’t allocate 10% of your gross income to you emergency fund, then contribute something, no matter how small. Even $5 a month can add up and can start putting you in the saving mindset. As your situation improves, that $5 per month can increase to $20, then to $50, then to $100 and even more. When you nurture the habit of saving a certain percent of your income no matter what, you’ll find that as your income increases the amount you save grows too.