editor’s note: I’m thrilled to introduce Mark Hooson, today’s guest author. He has sound advice that any family could use to their benefit, especially in these difficult financial times. Welcome, Mark!
It’s a clichéd sentiment, but balancing your family’s budget every month really can be a bit like walking a tight-rope – with little room for maneuver once your outgoings have been accounted for.
The logical thing to do then is to make sure your family has a ‘savings safety net’ so that if you are hit with any surprise expenditures, you won’t find yourself in free fall.
Some financial experts advise having a savings pot equivalent to three months’ salary in reserve so that you can afford anything that might crop up.
Firstly, three months’ salary seems like a huge amount to be able to put aside, and an even bigger sum to have just sitting in a savings account for a rainy day.
Consider the alternative though: if you found yourself too ill to work for a period of time, or if you were made redundant, how would your family continue to meet the financial challenges life throws at us?
Another area of your expenses which likes to surprise you is motoring. Of course you know how much you spend every month on fuel and insurance, but maintenance costs are not something you can really predict (unless you are a mechanic!)
Worse still, if you are unfortunate enough to be involved in an accident on the roads, you could find yourself with higher monthly car insurance premiums.
So, enough scaremongering – I’m guessing if you have read this far you get the point. A savings safety net could be invaluable in these situations – but how do you go about setting one up?
You can’t predict what financial surprises family-life will present you with, but at least with a savings safety net you can be a little more prepared for a hypothetical rainy day, and have some peace of mind in the meantime.
Mark Hooson writes about debt, savings and credit for Money Supermarket.com
Image courtesy of hojusaram via Creative Commons license, some rights reserved.
Earnest Parenting: help for parents who want to be financially secure.
Tags: budget, emergency, finances, parenting help, planning, savings, wisdom
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My biggest problem right now is that with this recession, I am earning much less than I used to and my bills just wont go away. I’ve cut just about every nonessential expense I can think of and spending $10 on a shirt for myself is a big splurge.
The upside is that I am getting very close to paying off all my credit cards.
I’ll gear this review to 2 types of people: ones in debt from overextension and the ones in debt from medical hardship. Either one can sign up to a debt relief company because those are legitimate hardships.
Those are hardships I hope people are all able to recover from; being in debt is no fun!