How to Budget for the Unexpected?
It is impossible to be prepared for every possible emergency, but there are ways to plan ahead and budget for unexpected events. Here are some tips to help you become more prepared for whatever may come your way.
Building an Emergency Fund
Your first line of defense for any expected expense is your emergency fund. However, recent reports showed that around 25% of Americans don’t have an emergency savings fund.
If you’re one of them, consider building an emergency fund now. Ideally, it should be enough to cover at least six months of living expenses. However, depending on your circumstances, you may need more.
The importance of an emergency fund cannot be denied. It can help you deal with expenses such as medical emergencies or in the event you lose your job.
Review Last Year Spending
It is also helpful to know how much you spent during the previous year. Check your bank and credit card statements. Find out if there are any irregular expenses you’ve paid for using your credit card. Consider additional spending activities, such as recreation, groceries, entertainment, and shopping for household goods. Then calculate the total spending.
By doing this, you get an idea of how much you will be spending in the current year. This exercise also allows you to figure out how much money you can set aside for your emergency fund. Additionally, it gives you an opportunity to see if there are areas you can cut back on so that you can save more money.
Get Allotment Loans
Budgeting for the unexpected will help you maintain your finances in the event of an emergency. However, in some situations, your emergency budget may still not be enough, and you may need to consider getting an allotment loan.
This type of loan is available to federal employees and offers affordable and fixed interest rates. Unlike other loans, it does not require any collateral and the payment terms are manageable. As the name suggests, you pay for the loan by allotting a portion of your monthly salary via payroll deduction.
If you want to learn more about loans for federal employees or are looking for a reliable provider, consider our ACCESS LOANS™ products. You can complete the application process online in just a few minutes by signing up. You may even find same-day funding after you sign the loan documents.
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