Anyone can face unexpected circumstances. Job loss, health problems, divorce - this is not a complete list of possible problems. In such moments, it is important to have a reserve of money that will be enough to cover regular expenses for at least several months.
We figure out how to correctly create financial reserves and calculate the amount of savings.
What is a financial cushion?
A financial safety cushion is money saved up for unforeseen circumstances. These savings should not be confused with investment capital, because an investor does not always have the opportunity to quickly withdraw assets and use them for payment. A financial safety cushion should be created without taking into account investments in securities, mutual funds, real estate and business projects.
Why do you need a financial safety cushion?
In most cases, a financial cushion is necessary to be able to maintain an acceptable standard of living if budget revenues cease. With a certain amount of money, you can continue to pay for loans, utilities, and other mandatory expenses, not to mention purchasing food, medicine, and other vital items.
This situation may arise not only as a result of a forced slovenia mobile database loss of a job. Sometimes you just want to take a break and relax from the routine.
You may also need money for unexpected expenses. These don't necessarily have to be medical bills. A sudden purchase of a refrigerator or washing machine can put a noticeable strain on your budget. Don't forget about psychological comfort. A financial safety net of at least several monthly earnings will add confidence in the future.
How to build a cash reserve
It is better to start accumulating reserves as early as possible.
The first thing you need to do is determine how much you are willing to allocate each month for these goals. To achieve results, you need to save regularly, it should become a habit.