For day two of Fix Your Finances, Terri and I tackle savings. Like the majority of Americans, Terri has a pretty low savings account. It’s $25 to be exact. She explained to me that she recently emptied it to pay off a large medical debt, which is the definition of an emergency expense. However, she created a new headache by leaving herself unprepared should another emergency pop up before she has time to rebuild her savings.
As you likely know, it’s tax season, which means Terri is anticipating a return soon. It’s always smart to make a plan for your return before you receive it. It’s really easy to blow your refund, so Terri and I made a plan for hers. It’s a simple one, Terri will put her entire tax return into her savings account to start rebuilding her emergency fund. If you have less than $1,000 in your savings account, this has to be your plan as well. The decision to prioritize your emergency fund over your other obligations and desires is a huge one. You can do it.
The same goes for other large deposits: bonuses, raises, etc. Put those to work by saving or paying off debt instead of absorbing them into your lifestyle. Download today’s worksheet and use it to create your savings plan.