The Polyamorous Misanthrope
Just for Fun
What is Polyamory?
Featuring Spice! -- The PolyFamily Web Comic
Polyamory and Financial Security
How to Save Enough for a Rainy Day
In amassing a savings account, it's a good idea to know what you're saving for . In our house, our goal is to have six months' worth of expenses in various accounts. Since we run our own business, this is only prudent. It also guards against the temptation to use a credit card in emergencies. Make sure you keep this money in a money market account or some place that gets a good interest rate, but do make sure that some of it can be gotten to quickly, if needed. (i.e. You have $10,000 saved. Put $8,000 in a short-term CD, and keep the rest in as high an interest bearing checking account as you can).
Little trickles here and there do add up. If a little bit of income comes in from a sideline, it can be earmarked for savings. You'll never miss it. If you get a raise, you can earmark the extra money as savings. If you're not used to it, you won't miss it.
Once you've saved your specified amount, however, do stop. You'll only need to make payments to this category when you use the money for something.
I know that there are those that argue that if you're paying 18% in interest on credit card debt, there's no use in saving at no more than 8% (if you're lucky). Any there are many financial advisors who would back up such a statement. But, my thought is, if you could do the math and act on it, would you really have gotten into debt in the first place? Really?
The way I look at it is this: If you don't save, you're accepting a revolving debt for the rest of your life. If it isn't one thing, it's another. The roof is going to need fixing, the car needs new tires, the unexpected expenses just come up. That's the way life works and that's fine. But I don't want to be financing that at 18%, do you? Apply as much as you can to debt reduction, if you need to -- sure. But do go ahead and sock at least a little away in savings.
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