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Having an emergency fund can prove life-saving when you are in desperate need of money. However, before starting to use the money, make sure the situation really requires the measure.
For instance, try spending the money on situations that occur totally unexpectedly rather than on events that happen on a regular basis.
One very important reason, if not the most important of them all, when choosing to use your emergency fund, is the situation of necessity.
Of course, if you have to, you should do it. However, you might want to pay attention to what necessity really means: if you can as well do without, then you probably should not spend your savings on that.
Whenever you have the impression that you should use your emergency fund, ask yourself if the situation really is urgent. If the answer is Yes, there is no time to waste.
However, take time and be patient in managing different situations as, if there is no need to spend the money, than better not do it. Remember, it took time to build up that fund, no matter how big or small it eventually is.
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No matter how little or how much money you earn, creating a monthly budget is one of the most important aspects of managing your finances. What gets measured gets managed.
The Envelope system is a way to track your variable expenses like food, entertainment, and drinks.
This method, preferably used weekly, allocates a certain amount in each category in labeled envelopes (food, drinks, movies, etc.). Once the envelope is empty, you are done spending in that category.
The principles that make a good budget, something you can stick to:
Budget for the life you have. When you’re going through your budget and assigning spending categories, be realistic.
Don’t tell yourself you’ll never buy a single discretionary i...
This becomes a problem when you’re spending for a life you can’t afford. It puts pressure on your budget and encourages you to live in a paycheck to paycheck cycle.
Assess your financial situation, cut back on your expenses, prioritize your money goals, and then come up with a new spending plan.
It’s hard to stick to a budget that doesn’t have a goal.
When there isn’t one, your budget becomes an afterthought rather than a spending plan to reach your financial goals.