Debt - News

How To Build A Savings Account When You Feel Like You’re Drowning In Debt

Without an emergency fund, you’re likely to take on even more debt when unexpected expenses pop up, as detailed by the Consumer Financial Protection Bureau. If your goal is to create an emergency fund, you’ll want to add up the total of every bill and living expense you cover each month. Start with the bills that cost the same amount every month, like your rent, mortgage payment, phone bill, and car insurance. For bills that change on a month-to-month basis, you can use an average of the past year or 6 months of bills. Don’t forget expenses that don’t arrive in bill form, like groceries, personal care items, gifts, and recreation (via Quicken).

Once you have a grand total of how much your expenses cost each month, multiply that number by three for your first savings goal. For example, if your monthly expenses add up to $4,500, then your goal is to save $13,500. If your expenses add up to $6,000 a month, your savings goal is $18,000, and if your monthly expenses are $2,500, your savings goal is $7,500. These numbers might seem unattainable at first, but with the right habits in place, you can get there. Once you’re able to maintain this amount in your savings account for an extended period, up your goal to 6 months’ worth of expenses. 


Source link

Related Articles

Leave a Reply

Your email address will not be published.

Back to top button