Does the thought of retirement in future haunt you about leaving no source of income? If yes, then you just need to save. Savings is all about enabling you to avoid personal disasters. It also makes you financially independent. The major reason as to why one should save is for insurance against worse weather or provision for retirement.
If you are unable to plan your security, then you are not alone. A statistical study shows that many Americans tend to lower their living standards during retirement while only a small segment of 20% are confident that they will enjoy a cosy and comfortable retirement.
It is also found that the Americans are finding difficulties in earning more as compared to the inflation rate which probably reduces the returns from savings as the credit card debts pile up. Now, it is completely understandable that you might get stuck up in the daily chores. Also, it becomes difficult to prioritize your funding properly. But, below is the guide to help you get started with.
What is an emergency fund and how much is needed to save?
Emergency funds refer to a separate account where you put in some amount of money every month as a blend of savings accounts with high yields and short-term CDs. Now, the standard financial advice would be that you aim for expenses worth three to six months. Also, every situation is different and every debt has a different priority. So, you should segregate which costs are more essential as compared to others. There are basically six costs in the focus area which are food, housing, transportation, healthcare, utilities, and debts.