The rollercoaster of life is unpredictable, and it is impossible to determine when an emergency may arise.  An ounce of preparation can be worth a pound of cure, and thus, it is critical that you prepare to protect your family’s well-being.

A cash reserve is money that is set aside for a rainy day and not used for normal bills and expenses. If you have a family, it is essential to have a cash reserve large enough to cover your household expenses for three to six months.  The cash reserve should cover mortgage or rent, utilities, phones (landline and mobile), cable, Internet, groceries, automobile, healthcare, tuition, etc.  Imagine if you were laid off from work, your company went bankrupt, or if you were fired. What would your family do?

Setbacks can turn into tragedies for families without cash reserves or a support system to fall back on.  Recently, a family became homeless simply because of their lack of planning for potential emergencies. The family lived comfortably in a big house and Mom was able to stay home, devoting her time and attention to her two kids. One fateful night, a fire destroyed the house and everything they owned. The family did not have a cash reserve for a rainy day or an adequate support system, and sadly, the worst case scenario took effect.

Protect your family and make sure that you have a cash reserve saved. Many banks have special accounts that can help put money into a cash reserve, while gaining interest. We never know when an emergency might occur: costly home improvements, car failures, un-insured medical bills, a natural disaster, or the loss of a job. In order to remove some of the worry from an emergency situation, it is important to be prepared.

Three benefits of a cash reserve

1. A cash reserve will lessen the burden of a family emergency.
2. Saving that cash reserve develops traits leading toward financial security, which can translate to wealth later in life.
   
3. Your cash reserve will strengthen your independence. 

Three easy ways to start saving money

Start with a savings account; place a certain percentage of your salary into the account each month. Even by saving $5 each day, you can accumulate thousands in savings each year. 

Eliminate unnecessary expenses. This includes money spent dining out too often, buying extra clothes, or purchasing a pricey cup of coffee each morning.  Another important way to save money is to wipe away debt.  Throw away credit card applications that you do not need, and you should never spend more than you can afford.

Create a financial plan and stick with it. Start with an easy plan and as your goals are reached, increase your financial plan’s sophistication. A financial advisor can help you decide the best way to invest your money that will allow you to save money, while making a profit.

People who learn how to save, at a young age, make better financial decisions later in life. Train yourself and your family to start saving money today and build a better future.