Prepare for financial emergencies
This simple five-step guide from our Queer Money™ podcast will prepare you for financial emergencies with your eyes closed. Correct and improve your credit score when you take this Credit Card Payoff Course for Debt-Free Men.
Listen to Saving for Financial Emergencies:
Dealing with an emergency is difficult enough, but add to that the stress of not being able to pay your bills afterwards. An unexpected accident, illness or car repair can cause major financial problems long after the initial crisis. According to a recent MassMutual study, if a $5,000 unexpected expense arose, half of our community would be in real financial trouble. If just thinking about it makes you stressed, listen as David and John explain the five steps to preparing for a financial emergency.
Today, the Debt Free Guys™ look at emergency savings goals, the importance of having a separate account for that money, and the value of direct deposit to gradually build up enough savings to cover six months of living expenses. Learn why it’s important to build up your emergency savings before moving on to other financial goals, and why “out of sight, out of mind” is a good thing! If you’re not prepared for a financial emergency, it’s time to start building your emergency savings today with these five easy steps!
Topics covered to prepare for financial emergencies
Outstanding data from the MassMutual LGBTQ Financial Security Summary
- Four out of five respondents say high levels of debt make it difficult to manage their finances
- 25% report having less than $500 in savings
- 50% say an unexpected $5,000 expense would result in real cuts/they wouldn’t make ends meet
John and David’s advice for setting emergency savings goals
- Ultimately, save enough to cover three to six months of living expenses
- Do everything you can to save $500 as quickly as possible (deductible)
Step 1: Create a simple, no-frills savings account that is separate from all others
- Separate financial institution, difficult to access
- Take advantage of your laziness
Step 2: Write down your account information
- Account number
- Nine-digit transit route number
Step 3: Set up direct deposit from employer
- Complete the employer direct deposit form
- A portion of the paycheck is automatically sent to the emergency savings fund
- Avoid checking statements (out of sight, out of mind)
Step 4: Choose an amount to set aside each month
- Direct deposit allows for a consistent contribution
- Make small changes (e.g. skipping one lunch per week)
Step 5: Increase your contribution in line with salary increases
- Emergency savings should grow with your success
- 3% increase to $50,000 = $100/month after taxes
- Contribute at least $25 toward emergency savings
John and David’s next steps once emergency savings are in place
- Shift the focus to other goals, e.g. B.: Pay off debts
- Set up additional accounts for specific purposes (e.g. home improvement, vacation).