Thursday, January 3, 2008
Today's Tip: Budget for the Unexpected
When I was little, my grandfather told me that he would always save a $20 bill in his wallet.
When I asked to see it, sure enough there it was, folded crisp in quarters and to my his
wallet. His response was that you never knew when you might need it.
Budgeting should be similar. In fact, most businesses are required to have a disaster
preparedness plan, or a business continuity plan for auditing purposes. For example, what
will the business do in the event of server infiltration or malfunction? Such an event would
business thousands in revenues!
A personal budget should have a "household continuity plan." While insurance will cover
most of what could happen to your home or vehicle, most homeowners deductible
expenses are $500. That is a considerable one-time, unbudgeted expense! Also, consider
family obligations. Imagine your son or daughter recently graduating college and finding
that it's just not that easy to get a "real job" in the working world. Or imagine that they lose
that highly sought after job. According to monster.com, 60% of recent college graduates
return to live with parents after graduation. Not only does this evidence the difficulty that
this transition in life brings, but with this dependence comes favors. And you know as well
as I do that kids are never afraid to ask, no matter the age! Imagine your son or daughter
asking you for money because rent is due. If you don't have an emergency access fund,
this can put quite a damper on your finances for a month. The last thing you want is to
have to miss a credit card payment, or pay the minimum amount due, because you have to
help fund something unexpected like this!
Even if it is only a few dollars a month you can put aside, I would strongly encourage you
to do it. Most banks now have free online banking, and online banking allows you to
rename your accounts much like files on your computer. What's the harm in opening up a
separate checking account for that sole purpose?
Remember, luck favors the prepared. If you had a loved one pass away unexpectedly,
perhaps these funds could be paired with other family members to alleviate funeral costs.
There is much strength in numbers!
Have you downloaded the free budget yet? Our free budget spreadsheet is updated for
2008 and features a monthly account tracker and budget form!
When I was little, my grandfather told me that he would always save a $20 bill in his wallet.
When I asked to see it, sure enough there it was, folded crisp in quarters and to my his
wallet. His response was that you never knew when you might need it.
Budgeting should be similar. In fact, most businesses are required to have a disaster
preparedness plan, or a business continuity plan for auditing purposes. For example, what
will the business do in the event of server infiltration or malfunction? Such an event would
business thousands in revenues!
A personal budget should have a "household continuity plan." While insurance will cover
most of what could happen to your home or vehicle, most homeowners deductible
expenses are $500. That is a considerable one-time, unbudgeted expense! Also, consider
family obligations. Imagine your son or daughter recently graduating college and finding
that it's just not that easy to get a "real job" in the working world. Or imagine that they lose
that highly sought after job. According to monster.com, 60% of recent college graduates
return to live with parents after graduation. Not only does this evidence the difficulty that
this transition in life brings, but with this dependence comes favors. And you know as well
as I do that kids are never afraid to ask, no matter the age! Imagine your son or daughter
asking you for money because rent is due. If you don't have an emergency access fund,
this can put quite a damper on your finances for a month. The last thing you want is to
have to miss a credit card payment, or pay the minimum amount due, because you have to
help fund something unexpected like this!
Even if it is only a few dollars a month you can put aside, I would strongly encourage you
to do it. Most banks now have free online banking, and online banking allows you to
rename your accounts much like files on your computer. What's the harm in opening up a
separate checking account for that sole purpose?
Remember, luck favors the prepared. If you had a loved one pass away unexpectedly,
perhaps these funds could be paired with other family members to alleviate funeral costs.
There is much strength in numbers!
Have you downloaded the free budget yet? Our free budget spreadsheet is updated for
2008 and features a monthly account tracker and budget form!
My Financial Profile - MyFinPro.com
 |  |  |  |  |  |
| -------The Budget Tip Archive------- |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
Free Budget Spreadsheet
The Budget Tip of the Day
Get It Here