As part of your budget and personal spending plan preparation you should aspire to putting aside a little extra cash towards building up an ‘emergency fund’.
What is an emergency fund?
Have you ever had those times when life happens and an event strikes you out of the blue that costs you money?
This could be an event such as your car breaking down, a medical emergency, additional school funds, home repairs or even a more serious event such as job loss.
So what are the consequences of not having an emergency fund? Many people have no choice but to resort to borrowing the money. This means that they may dip further into the credit and debt spiral.
If there is another emergency or sudden event this will just compound the situation and increase the debt burden further. So the vicious spiral goes.
An emergency fund is exactly what it says it is – a separate fund dedicated to meet any emergency eventualities that one may incur from time to time.
How do I create an emergency fund?
You can start small or start with what you can afford. The important thing is make a start. Don’t procrastinate and divert the funds elsewhere. Slot the emergency fund payment into your budget and make it a regular monthly contribution discipline.
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Where should I invest it?
Typically you need something that is liquid. You need something that you can access fairly easily but have it just far enough out of reach so that you don’t be tempted to plunder any of the accumulated capital too easily.
You want something where the investment risk is low so that the capital is not eroded but at the same time there will be a little bit of growth.
The most likely facility for an emergency fund would be a 32-day notice deposit account or a suitable money market investment vehicle. These are available through most financial institutions.
How much should I accumulate in my fund?
The general rule of thumb is that at all times the capital in your emergency fund should match 3 – 6 months of gross monthly expenses.
If at any stage you dip into it you must ensure that you bring it back up to these levels again.
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An emergency fund is an important part of your personal financial planning. It will give you piece of mind that should an emergency strike that financially you will be able to meet the challenge.
Remember, the cost of not having such a fund will mean that you could very well incur the cost of credit if you have to borrow the money.
10 Tips To Become A Millionaire This Year
Becoming a millionaire requires changing your mindset and implementing some changes.
Becoming a millionaire may seem out of your reach, but it’s possible with the right attitude and guidance. The fact of the matter is your income can only grow as quickly as you do, so you need to change your mindset to achieve your goal of becoming a millionaire.
Once you have a millionaire mind, you can’t lose it, no matter what financial or business mistakes you make along the way. To get yourself there, you’re going to need some structure. To help you, I’ve outlined the top ten tips you should follow to become a millionaire this year.
If You Think These 5 Things, You’ll Never Get Rich By The Time You’re 30
Five common mistakes entrepreneurs make when starting a business and how to correct them.
Last week, I had lunch with a millennial who wanted some advice about a business he’s starting. After the usual small talk, we got down to discussing his business plan. Within a short time, it was clear that his business idea was great, his plan for executing was fairly solid and he had gathered together a strong team to help him make it happen.
So far, so good. But, to be frank, this guy has no chance of being successful with his current mentality. What it takes to be rich (or successful in any measure) has a lot more to do with your mindset than your ideas and plans.
From the time we started in business at the ripe ages of six and seven, our Grandpa Joe taught my brother Matthew and me many lessons about the details of running a profitable business. Over the years, we learned about how to create a business plan; how to market our products and services; and how to take care of customers, vendors and employees. All this knowledge has been invaluable to us in creating and running successful businesses. But, what our grandfather taught us about attitude and mindset trumps all other lessons.
Without calling out the specific individual I spoke with recently, below are five “hypothetical” attitudes that will get you nowhere in your journey to success – and the attitudes that should replace them.
5 Habits That Lead To Millionaire Business Success
You need the right habits if you’re going to succeed.
What do all millionaire businesspeople have in common? Well, a lot of things.
I found from a recent study that 80 percent of all millionaires still go to work every single day. They’re working people just like me. But, they have to keep themselves in work or it all grinds to a halt. So what are the habits you need to make your business a success?
Nothing is ever going to come easy. You can look at the likes of Steve Jobs and Bill Gates, as well as the other usual suspects, to realize that success didn’t come with their first venture. Many of them failed time and time again. It took patience for them to become successful.
I read an article recently about 36-year-old teacher Andrew Hallam who became a self-made millionaire on a teaching salary. But, in his spare time he invested smart and lived frugally.
It proves you don’t have to inherit lots of money or become an instant success to make a millionaire business.
You have to be dedicated to your craft if you’re going to become successful. Going back to Bill Gates again, he started his business in the back of his garage. Now that’s dedication.
It’s what I tell all my students. If they’re not dedicated to this, then they should leave. You need to be able to push through the barren periods if you’re going to reach the oasis of success.
3. Ambition and big dreams
Have you ever heard the quote, “Shoot for the moon. Even if you miss you’ll land among the stars”?
I take that to heart because even if you aim to become a billionaire and miss you still might be a millionaire many times over. Take the Wright Brothers as an example. Not content with creating a successful glider in 1902 they went on to create the world’s first airplane in 1903, making four brief flights in Kitty Hawk. It demonstrates the importance of dreaming big because you never know what you might achieve.
4. Learn from mistakes
Every good businessperson will mess something up. It’s inevitable. What’s important is how you learn from your mistakes over time. Do you adapt after making your mistakes?
Millionaire businesspeople always set some time aside to reflect. Then they create a plan of action for ensuring that it doesn’t happen again. Most failed businesspeople put it down to “bad luck.”
5. Focus on niches
This important! Try to take over a whole industry at once and you’ll inevitably get swallowed up by the competition. Start small and control your own niche before moving into another niche. When you master your small area, you can push on and expand.
You’ll be amazed at how much easier it is to expand after you master your own niche/audience first.
Do you have what it takes? That’s the question I always ask novice businesspeople. You need a plan and you need the right habits if you’re going to succeed.
This article was originally posted here on Entrepreneur.com.
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