An emergency fund is the source of financing for unexpected expenses. They could be for a medical condition, mortgage payment, travel, funeral, or others. You may not know how expensive the situation could be. Building emergency funds will give you an insight into cutting non-essential expenses and earning more to manage any situation calmly without panic.
Budget – Best Planning Method
List your income sources and calculate the total value (Gross income) for a month. Recurring expenses include household, fuel, energy and power, tuition fee, rent, loan repayment, and medicines, etc. You may not be able to avoid any of them. So, the best practice is to deduct such expenses from your monthly income before making a budget for other expenses. Gross income minus Recurring expenses will be your net monthly income.
Health Condition: Evaluate your present health condition. Are there any symptoms of hypertension, diabetes, heart problems, or other issues? Are you being treated for any such conditions? Then you need to calculate the expenses for hospitalization, treatment, or maybe even surgery. Probability calculation will always keep you on the safer side.
Medical Insurance: If you are an employee, your employer might have insured for medical needs. If you are self-employed or a business person also, you’ll need medical insurance. Buy the best plan which covers maximum expenses related to hospitalization, treatment, and surgery. The premium could be relatively higher than the other plans, but it is worthwhile.
Addictive Expenses: Your addictive expenses will be for cigarettes, alcohol, and maybe other forms of physical and psychological intoxications. By reducing or eliminating such expenses, you can avoid the risks of health failure and lavishness in spending. You can also save more money for your essential and medical expenses.
Saving – Practice from Now
Lavish spending eventually leads to self-pitying conditions at some point in life. Normally such situations occur more frequently after 40. The fear of uncertainty in life (most of them could be imagined) may compel you to spend on addictions like alcohol and smoking.
The sense of insecurity will come back to haunt you, once the nostalgic feelings are out. So, the first step is to overcome the fear of insecurity. Then you get the clarity to plan and act without any element of fear.
Home Food: Home food is healthy and hygienic. It is also economical to eat at home than in restaurants. Six days of home food for your family can save for three days of hospitalization. You may not realize it, but calculations can tell the difference.
Travel Expenses: Using a carpool, Metro-rail or other public transport can save on gas expenses. You may use your car for emergency travels.
Luxury Expenses: An expensive champagne, jewelry, car, and weekend party are some of the expenses you may avoid or reduce.
Extra Income: You can generate extra income by freelancing, part-time job, investments and other forms of revenue generators. You can save the extra income for your emergency fund.
Practice these simple suggestions for two months from now. If you feel better, continue with it and enjoy your life after 40 peacefully.