An Emergency Fund

One of the first things that we all need to learn from the uncertainty in this economy is to be ready for bumps in the road. If you're a fan of Dave Ramsey like me, then you are well aware of the baby steps he sets out. The first and third steps are about starting and then fully funding an emergency savings account for - you guessed it - emergencies. Like this one.

The first and largest obstacle to building an emergency fund is wanting it. We have to really, really want it! If we want things more than an emergency fund, then we will never have one. Some might say that they can't afford to save, but I think that those who actually can't afford to would be a tiny minority. You would need to be at or below the poverty level to not be able to save something. Most folks simply spend as much as they earn or more and then don't have anything left to save. Living like you make $70K/yr when you only make $60k/yr is a recipe for disaster.

The second obstacle to building that emergency fund is having a budget and sticking to it. Many folks will simply balk at the word "Budget" and run! But I want to tell you about an easy and incredibly effective way to do it. And when the method is easy combined with desire - you've got success!

I've been using Mvelopes Money Manager by Finicity for years. It's way better than Quicken, MS Money, or even a spreadsheet in my opinion. For a small monthly fee, you can have instant visibility to your spending and know exactly how much you have left for any given budget area. Do you have enough to eat out tonight? Just a quick check and you can answer yes or no. And if yes, you can do it with no guilt or worry about what it will do to your other bills. You've already planned for them and know that you will have enough when those bills come in later in the month.

Budgeting, when done right, actually provides peace and security to your finances, not grief and stress. Stress is doing your finances the same way you've always been doing them and expecting them to turn out differently next time. Wrong! Try Mvelopes and see why I so highly recommend it. It automatically goes out to your bank(s) and credit card(s) each night and fetches your transactions. They show up the next day and you simply drag and drop them to the appropriate envelope. Whey you buy gas, you drag that purchase to the fuel envelope. Groceries to the food envelope and gift purchases to the gift envelope, etc.

Did I say gift? How would you like to actually to have money available to buy gifts for Christmas and not stress about it? It comes around every year whether you plan for it or not. So start planning for it and you will enjoy it much more. Simply set aside some money each month and when December rolls around, you're ready to go shopping without that credit card!

Will the car need new tires next year? Plan for it by setting aside some money each month in one of the envelopes and when next year comes around - presto! You can pay cash for those tires instead of putting them on a credit card and worry about when you can afford to pay for them. It's amazing!

When you get paid, you simply fund your envelopes according to your saved plan. Simple. Need to make an adjustment this paycheck? No problem. Just tweak your allocations slightly on a per paycheck basis.

I manage my budget in about 5-10 minutes every 2-3 days. That's all! Really! I can check it from any computer or mobile device and I can find out how much is left in any envelope very quickly. I even manage my own escrow for my house with it. Are you tired of your mortgage company adjusting your payment each year because of tax or insurance estimates being wrong? Do it yourself next time. It really works well!

Mvelopes Money Manager is helping me meet my financial goals and live a stress free financial life. I really believe it's a better way.