Knowlopedia
Valued Contributor
- Credits
- $0.37390
To determine how much you need to save each month, take a look at your projected expenses and determine how many months it will take. It may seem rather tedious, but this is the best way to find out exactly how much you can afford if you miss a few months because of an emergency or other unforeseen circumstance. Additionally, make sure that your emergency fund is large enough to last at least six months — useful in case of job loss or health issue.
What you need to look at:
1. Fixed Expenses.
Your fixed expenses include such things as your mortgage and rent, utilities, insurance, and property taxes.
2. Variable Expenses.
Variable expenses are largely dependent on your income level, but they usually include things like groceries, entertainment activities, car payments and repairs and so forth. These are definitely the expenses that will vary the most depending on how you make money with your business or profession.
3. Income Sources (in order of importance).
You will want to reduce your expenses while increasing income. Keep in mind that you may be able to cut one expense and still have money left over.
4. Projected Expenses
This is what you need to add up from step three, including the fixed and variable expenses. Now, you can look at your projected income level for the coming year and determine how much surplus you have for emergencies.
What you need to look at:
1. Fixed Expenses.
Your fixed expenses include such things as your mortgage and rent, utilities, insurance, and property taxes.
2. Variable Expenses.
Variable expenses are largely dependent on your income level, but they usually include things like groceries, entertainment activities, car payments and repairs and so forth. These are definitely the expenses that will vary the most depending on how you make money with your business or profession.
3. Income Sources (in order of importance).
You will want to reduce your expenses while increasing income. Keep in mind that you may be able to cut one expense and still have money left over.
4. Projected Expenses
This is what you need to add up from step three, including the fixed and variable expenses. Now, you can look at your projected income level for the coming year and determine how much surplus you have for emergencies.
