How To Layoff-Proof Your Finances

Building an emergency fund is essential for families or singles. In fact, this is a form of recession and layoff-proof savings, which does not have to be hard to implement. In the event of job loss or natural disasters, you must have a steady flow of income to maintain living expenses and necessities. Similarly, you need ready cash for any medical emergencies, as well as “cash on the barrel” payments without using credit or debit cards. With this in mind, here are some ways you and yours can build a sound, emergency fund:

• It’s as simple as putting away 50 cents on every dollar you make. For example: you can put away a dollar for every two dollars earned. Make sure that this money is not touched for unnecessary expenses or entertainment. This should strictly be for emergencies and issues of that nature.
• Limit your monthly spending on eating out and entertainment. Create a well-balanced budget that takes into account how much you earn, as well as how much you owe. The money left over is what you have to survive on. However, you can easily generate more income by reducing unnecessary expenses.
• Pay off any existing debt at once; credit card, car payments, mortgage, etc. Most companies are willing to work out flexible repayment plans that should not keep you out of pocket. The main goal is to pay off principal and not waste money on finance charges or interest fees.
• Only use the money in your savings account if absolutely necessary. Try using and replacing money in and out of your checking account. Again, allocate certain funds for your emergency account every month. This includes any money you make above and beyond your work salary; CDs, stocks, bonds, real-estate investments, etc.

It can be difficult saving for rainy days with existing debt. With this in mind, always pay off the smallest balances first with credit cards. This makes it more manageable and leaves you with enough money to store away. Similarly, allocate enough money for bills and expenses, but do not use credit cards while you are paying them off.