Fight back money monsters hiding and waiting to wreak havoc on your finances this spooky season.
Does the thought of accidents, home or auto repair, healthcare costs, or sudden losses to your income keep you up at night, shivering under the covers? An emergency savings account can help protect you from unforeseen dangers and make sure you’re prepared to handle whatever is lurking around the corner.
It's always scary to think about the bad things that could happen to us or the ones we love, especially when you try to prevent the worst from happening. Take, for instance, the 80’s horror comedy classic Gremlins. If you’ve seen the film, then you know no amount of planning or warning can prepare you for what can go wrong. The movie introduces a timidly cute furry rodent-like creature named Gizmo. Gizmo is a mogwai and initially is as harmless as he is lovable. However, Gizmo hides a terrifying secret. A secret the Peltzer family, who adopt Gizmo, soon realize when the three rules to keeping Gizmo aren’t followed.
The first rule is no bright lights; Gizmo is fatally vulnerable to bright lights, particularly sunlight, which will kill it. But strangely, that isn’t the most important rule. The second rule is Gizmo must never come in contact with water. Third and above all, a mogwai must never feed after midnight. It’s these latter two rules, when broken, that send the movie’s characters down a spiral of terror, albeit quite comedic at times. Viewers, along with the Peltzer family, soon find out that one wet mogwai quickly turns to hundreds of mogwai and a midnight snack does more than just cause a tummy ache; it mutates these sweet, playful furballs of cuteness into slimy, green monsters of mayhem. Once fully fledged “gremlins,” the pint-sized creatures live up to their name, wreaking havoc on the quiet small town and its residents.
While it would seem that these rules, with careful planning and caution, would be simple enough to follow, the film serves as a cautionary tale that anything that can go wrong will go wrong à la Murphy’s Law, especially when you least expect it. Although in real life you don’t have to worry about 2-foot-high gremlins lurking under your bed or in your closet, it’s always good to be prepared for surprises. And the best way to do that is to have an emergency fund in place.
An emergency savings account is a great safety net to have for when things don’t go as planned. Sure, warranties and insurance are great protection, but they can take time to process and receive. Emergency funds, however, can be a part of a traditional savings account or a completely separate account through your banking institution, thus allowing for quicker access. However, unlike a savings account where money could be saved for a specific goal or a big future purchase, an emergency account is there for when you need it the most.
Start simple, start small, start saving!
If you don’t have an emergency account or you want to add to an existing account, building emergency funds can take time and practice. There isn’t a minimum amount you have to save from each paycheck to put in either an emergency or savings account, but it’s good to have a target amount in mind to build toward. Many financial experts recommend having at least three to six months of essential expenses or more saved, which is considered a good goal to start with generally, but that can vary given your specific needs and situation. Regardless, building an emergency account shouldn’t cause you stress about your finances but instead provide peace of mind that your assets and well-being will be safe financially. If you’re unsure how and where to begin, consider starting small with what you're able and comfortable saving, adding more as your finances improve.
Money in before money out
Another easy way to start is to “pay yourself” first each paycheck before paying bills and covering expenses. When payday arrives, automatically transferring money into a savings account encourages mindful spending to cover expenses until the following pay period. A good way to ensure you’re saving and managing expenses is by making a budget. There are a few budgeting styles you can choose from to help you save better: Balanced budget, 50/30/20 and Reverse budgeting. Find a method that works best for your financial goals. If you still aren’t sure how much you should put toward a savings and emergency savings account, speak with a financial advisor for assistance.
It's never too early – or late – to begin or boost your emergency savings. Planning for the future and safeguarding your financial health and assets is one of many steps on the path to financial freedom. Saving for things that possibly will happen, or probably will, may not seem as fun as spending your hard-earned money on things you enjoy but it’s helpful to know you have it when needed. Unnecessary debt, credit card interest payments, and routine bills can be scary enough. But when you throw in unexpected healthcare costs, the hefty price of household appliance replacement, or vehicle maintenance and repair, it can all send you screaming in fear. With ghosts, ghouls and goblins aplenty this season, the last thing you need surprising you is a money monster trying to get its greedy little hands on your finances.
So if your air conditioner goes on the fritz or your washing machine blows up or your video recorder conks out; before you call the repairman, turn on all the lights, check all the closets and cupboards, look under all the beds, 'cause you never can tell --there just might be a gremlin in your house.