What is Financial Cushion ?

emergency fund secure fund

Loss of job, car failure, medical costs etc., all these are unexpected expenses.  They can happen to everyone. It is good idea to be prepared for such expenses. Nobody wants to ruin his home budget due the urgent financial need. For these situations a security fund = financial cushion is very useful. This is a shield that will protect you from financial problems. In this article you will find answers to the following questions:

  • What is a Financial Cushion?
  • How much money will you need to create your Financial Cushion?
  • Where to keep money collected for this purpose

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Pay yourself first -If you want to achieve financial independence

As we all know the level of future affluence depends on how much money we can save. The title rule is one of the oldest, simplest and most important in personal finance. This is the basic rule, described in most financial books. In this article I would like to explain the concept of paying yourself first.

What is the first bill you pay each month?

If you are thinking about paying first your bills, credit card payments etc. you are not smart as you think you are.  The first paid account every month after the paycheck should be the your own!

If you don’t have a home budget then start making one. You may read my first article home budget – step by step. It should be your first step to improve your financial situation.  Few weeks ago I wrote an article Assessment of your finances. Open it right now and do your assessment. At the end of this exercise you will know how much you can save every month.

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How to eat well and save money

food tips

Surely you have heard many times that you shouldn’t save on food. It’s basically true, when we speak only about health issues. Indeed, buying poor quality food or forgoing meals can in a short time reflect on our health and then lead to sickness, medications, therapy etc. Savings will disappear before your eyes. Therefore, I don’t advise eating junk food. Instead, I can give you few proven methods to make shopping for food much cheaper; in consequence you’ll stop wasting food in this context I wrote an article “Are You also throwing away $35 a month into the trash?” . Another words  – you’ll stop throwing away money.

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Your Net Value – apprise yourself

It the previous article I wrote about Your Income Statement (balance sheet) . It will help you find out what your monthly and annual expenses are. You will find an answer to the question “Do I control the cost of my living or not?”. But balance sheet doesn’t show the whole true about your financial situation. In order to see the entire financial situation you have to also consider your assets and add the value of assets to the equations.

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