The coronavirus outbreak will cause financial hardship for many families. Here in Austin, Texas, many people, already affected by the cancellation of the South-by-Southwest SXSW Festival, now face possible long-term financial challenges. An Emergency Fund would help ease their financial pain.
Capital Budget Strategies, LLC, Austin’s best Financial Coach, presents the following information to explain Emergency Funds:
(1) What is an Emergency Fund?
An Emergency Fund is cash kept in an accessible account for “emergency” use only. Therefore, rather than using a credit card to pay for car repairs, a broken HVAC, medical care or funeral expenses, you will have the cash available. Also, if you lose your job, the cash can used to pay monthly bills.
(2) How to decide what bills need to be paid?
Our Austin Money Coach recommends making a list of two columns, naming one Mandatory (nondiscretionary) and one Optional (discretionary). Under Mandatory, list the expenses you will have to pay even if unemployed, such as food, housing, car loan and utilities.
Under Optional, list the items you could temporality cancel, such as your gym membership, Netflix and the Wine Club. Remember, this will be crunch time, so you need to cut back on extras!
Add up the Mandatory column for your total monthly nondiscretionary expenses.
(3) How much to save?
Capital Budget Strategies, LLC, recommends saving 3 months’ worth of Mandatory expenses. To determine your amount, multiply your monthly total of nondiscretionary expenses by 3. So if you need $5,000 a month to “survive” during unemployment, your Emergency Fund should be $15,000.
(4) Is 3 months of expenses enough?
Once 3 months’ worth of expenses is achieved, budget for a monthly contribution, $100 for example, to build the Emergency Fund even more. While it would be great to have 6 months of savings, that is too expensive for many Austin families.
(5) Is help available?
Yes! For only $149, the Austin Financial Coach at Captial Budget Strategies, LLC will help you determine your Net Worth, analyze your spending, set up a Household Monthly Budget, an Emergency Fund and a Snowball Debt Repayment Plan. We will even access your retirement savings and introduce you to on-line banking.
Give us approximately 4 hours and start your journey to financial freedom.
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