Follow these steps to create an emergency reserve.
If you want to create an emergency fund, follow these steps through practical examples.
5 steps to create an emergency reserve
Having an emergency fund is essential for ensuring financial stability, providing a safety net to deal with unexpected events without having to incur debts.
This investment will provide protection, peace and financial security in times of crisis.
Check out the steps you should follow to create an emergency fund:
1st step - Calculating the value to reserve
The amount to be included in the reserve should ideally cover 3 to 6 months of your essential monthly expenses. For example, if your expenses (including installments, food, transportation, among others) total 1,000 euros, you need to reserve between 3,000 and 6,000 euros.
2nd step - Saving little by little
You don't have to save the full amount all at once. You can start with small amounts that you can afford from your budget, like 50 or 100 euros per month. By saving 100 euros, in 10 months you can have 1,000 euros reserved.
3rd step - Schedule transfers
Schedule automatic transfers at the beginning of each month, when receiving your salary, to a separate savings account or a secure investment can automate the process and make it more consistent.
4th step - Do not use the reservation except in emergencies.
The temptation to retrieve money set aside for more mundane situations can be great, but it is important to be committed and only use the money in case of unexpected situations, such as health problems, with a car, or a sudden loss of employment.
5th step - If using the reservation, fill it back.
If you experience an unexpected event that leads you to use your savings or part of it, make sure to save again so you can replenish the withdrawn amount. Unexpected situations happen and they might not come alone! So you should always be prepared.
These are practical examples of how you can create an emergency fund gradually and adapted to your budget.
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