Welcome to Azura's Savings 101! We are excited to cover a new Savings topic each month. This month's topic is all about your savings account. An important part of your budget is your savings goals. Figuring out how much to save and what to save for can be tough!
Did you know 61% of Americans don't have enough in savings to cover a $1,000 emergency? If that sounds like you, read on for an easy guide to becoming more financially sound.
Create a small emergency fund
First, make a goal of putting a portion of your paycheck into savings until you hit $1,000. This $1,000 is your safety net if your car breaks down, your child gets injured or you have an unexpected bill. You don't have to save this amount overnight, but it's best to get started than not. Even $100 a month will get you to $1,000 in less than a year!
Tackle Your Debt
There's no point venturing out to sea in a boat full of holes, right? Ridding yourself of high-interest debt is an important part to your savings plan. Once you have your emergency fund in place, focus on paying off your credit cards, student loans, and other interest accruing debt. If you don't know where to start, we love this great Debt Payoff Guide through Nerdwallet.
Build a Safety Net
Okay, now that you have paid down your high interest debt, it's important to build your emergency fund. Use the cash you were putting towards your debt each month to get started. Many experts recommend saving 3 to 6 months worth of an emergency fund. Check out this calculator to find out what that amount means to you. It may take a year, it may take less time, it all depends, but you will be glad you stuck to the plan if and when you ever need to use it.
Re-purpose Your Savings Funds
Once you have your emergency fund built, you can dial down your savings efforts a bit. It’s always good to be putting something away, but there may be more your money can do for you. After you have established your safety net, switch gears toward other options such as bulking up your retirement, paying off your mortgage, saving for vacations or other needs, setting up your children's education fund and anything else you can think of!
Savings may seem like a daunting task, but getting started is half the battle! Whether you're just starting out, or figuring out what to do after an emergency fund is built, we hope this installment of Savings 101 has given you some new and useful information! As always, our financial associates are happy to answer any questions you may have about your budget or finances, just give us a call at 785-233-5556 or visit one of our full service locations.