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Putting Together A Rainy Day Fund
Putting together a family budget is one of the first things that you should do. But once you have it in place, one area in which every family should start to make an investment is in their rainy day fund. This is a fund where you keep a certain amount of cash to tide you over in those times when you have lost your regular sources of income. In the uncertain financial world of today, it is something that every family should have. The biggest issues concerning such a fund is its size. In other words, how much money should you aim to have in your rainy day fund? A good amount to aim for is at least 9 months to a years worth of living expenses. It is important that you understand that this fund is not to be considered as an investment plan. Therefore, it should not be put into stocks, bonds, or other typical investment portfolios instruments. The ideal place is a money market account, a savings account, or an interest bearing checking account from which you can easily extract the money when needed. So where do you get the money to put into this fund? Unless you are rich, it can be difficult to come up with enough money to put into a rainy day fund. This is the main reason that not many families bother with it. But, if you understand that the money doesn't have to be put there as a lump sum, it becomes more possible . You just have to look at accumulating it over the years, gradually. In fact, one of the best ways to build up such a fund is to break it down into monthly payments and pay a little bit out of each paycheck towards the fund. Something that can help you to do this is one of the many emergency fund calculators that you can find on the Internet. But, figuring it out by hand is not too difficult either. Once you set up your account, it is important that you don't touch it. Don't use it to buy Christmas presents or vacations and so on. Leave it mostly untouched. The key word is mostly. It is important that you maintain a little bit of activity on the account simply because of the way that most states treat inactive accounts. In most states, an account with no customer activity on it for a period of 3-5 years, depending on the state, can be declared as dormant. This means that the state can come in and take the money and hold it as unclaimed property. Article Directory: http://www.articledashboard.com To compute the amount of rainy day funds that you should keep for yourself, use our emergency fund calculator. For additional budgeting and credit info such as debt management tips, please visit our website. |
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