Tag Archives: emergency fund

How to Rebuild Your Emergency Fund

piggy-bank

It finally happened – you had to spend your emergency fund. The good news is you had a fund, but the bad news is you spent it. Where do you go from here and how do you rebuild what you had? We wanted to offer some insight on ways you can begin to rebuild your emergency fund for the next rainy day.

Say ‘Bye’ To The Unnecessary 

That gym membership and extra show subscription will have to be canceled for now. You can get by without, as saving for the next emergency is more important than having Netflix, Amazon Prime, Hulu and HBO all at once. Find the right balance though, as it’s still okay to treat yourself every once in a while with a small expense.

Put Other Goals On Hold

If you were hoping to renovate your home or go on a big vacation, you still can, but maybe just wait a little. All that savings you were adding to that fund could partially be transferred into your new emergency account. It’s important to stay prepared, as you never know when the next disaster might strike.

Get A Side Gig

Acquiring another job can be very beneficial for making money quick. Use your marketing skills to do some work for clients on your own or wait tables for a few months. This will help you get back on track before you know it. Tutor, give music lessons, babysit, pet sit, dog walk or design wedding invitations – whatever your skills or availability, you can find a side gig that works for you.

Start Saying ‘No’

You don’t have to turn down every opportunity, but try to say ‘no’ here and there while rebuilding your funds. Should you be spending money on eating out if you already did it once this week? No. Should you spend money on a new outfit or tickets if you already treated yourself this month? No. Be a little more stingy while saving again, as it’ll come in handy the faster you replenish your fund if something happens suddenly.

Sell Something

You have plenty of clothes and decor that are no longer of use to you. There are probably old electronics lying around as well that you don’t use anymore. See what you can sell online or bring to a thrift store for a couple of bucks. You’re decluttering and adding money to your account – we couldn’t be more proud of you! 

Don’t let this minor setback discourage your financial independence. You were well-prepared by having your first emergency fund in place, so now it’s time to make the next one bigger and better than ever. If you’re looking for a great place to store that rainy day fund, our savings accounts are always available for you!

3 Questions to Ask Before Using Your Emergency Fund

emergency fund

When is a financial emergency, truly an emergency? Establishing an emergency fund is an incredibly important part of your budget, but knowing when to use it is just as important. Ask yourself these three questions before dipping into the pot.

Emergency Fund

If you’re new to budgeting, we recommend having a $1,000 cushion to help offset the cost of an emergency expense without it derailing the rest of your budget. If you aren’t able to put the $1,000 aside now, start small and work your way up to a number that is comfortable for you.

  • Is it unexpected?

Unfortunately, life can hit us with some difficult challenges that result in significant financial hardship. These are the situations in which use of the emergency fund is acceptable. This could be an unforeseen medical expense, like a child’s broken arm. Or, maybe you lost your job and will need some help getting the bills paid until you find new employment.

These type of events are unexpected and difficult to plan for, as you hope you will never have to face them. What would not be “allowable” is using the emergency fund to pay for expenses that you know are coming each month, such as a cable or utility bill.

  • Is it urgent?

The word emergency typically implies, immediate. For example, if you have a sick loved one who needs you across the country, it won’t do them any good for you to wait until you have saved up enough money to visit. They need you now and it is reasonable to use the emergency fund to get there.

  • Will it fulfill a need?

For many, it can be tempting to spend the large amount of money accumulating in your emergency fund. But this is where you need to truly consider needs vs. wants. For example, let’s say your dishwasher broke. Of course, this is not ideal and can make your life more difficult, especially if you have many people in your household.

However, it wouldn’t be categorized as a need. You can wash dishes by hand and start saving for a new one. But, if your dishwasher broke causing water damage to the cabinetry, this would qualify as an unexpected and urgent need to take care of as soon as possible.

If you’re looking for a safe place to keep your emergency fund, allow us to help it grow a little by placing it in a savings account with us!

7 Financial Goals to Make 2017 a Success

Personal Finances

Timberwood Bank challenges you to make 2017 the year of financial prosperity. Complete with an emergency fund, sound credit, and a monthly budget, you can conquer any fiscal goal so long as you keep moving towards it. To optimize your money management potential, we recommend these seven goals:

  1. Check Your Credit Score. There are many websites available which allow you to view your current credit score across the three reporting bureaus. However, the only federally authorized FREE site is com. This site gives users one free report from Equifax, TransUnion and Experian every year. By keeping regular track of your score, you can ensure that no fraudulent inquiries have been made, and no outstanding debts are currently being held against you. After all, a higher credit score could mean potential savings elsewhere.
  2. Make a Monthly Budget. This tool is invaluable when building your personal financial success. By creating a plan for each dollar you earn you are no longer reacting to your spending, but proactively telling your money where it should go. Adding this transparency to your spending can often showcase areas where you may be spending more than desired. After adjusting your monthly allocations you can then reassign some of those dollars to help build your personal savings and other areas of improvement.
  3. Automate Your Savings. “Out of sight, out of mind,” or so the saying goes. Adding processes to your budget, such as automated savings, can help you to accumulate money before you miss it. Before you start planning your spending for the month, determine how much you want to save. So long as your fixed monthly expenses are covered, you can then create an automatic monthly transfer from your checking to your savings. By doing this the same day you are paid, the funds will be gone before you even know to miss them. You can then budget the rest of your spending to cover flexible categories like groceries, entertainment, and more.
  4. Start an Emergency Fund. In order to safeguard your savings, you’ll need to create an emergency fund. This particular account offers protection against unexpected expenses or dilemmas that could otherwise infringe upon your diligent accrual of funds. It is often recommended to begin by saving $1,000, and then gradually work up to three or six months worth of income. By adding this cushion to your personal finances, you ensure that you are financially stable enough to weather storms both big and small.
  5. Submit Your Taxes Early. Tax fraud is an increasingly relevant issue, posing many problems for both the IRS and tax paying citizens. To help avoid potential criminals from using your information to their benefit, we suggest completing your tax return as soon as possible. Additionally, if you have a potential tax refund, the earlier you file your return, the sooner you are able to receive it.
  6. Maximize Your 401(k). To make the most of your diligent savings, we recommend revisiting your HR materials, to find out the specifics of your company’s 401(k) plan. If they will match up to ten percent, and you’re only contributing six, you could be missing out on free funds! Additionally, if you want to retire by a certain age, you may need to adjust your contributions to maximize the years you still have during your employment.
  7. Pay Down Your Credit Cards. Interest rates on credit cards are infamous for being consistently high. If you have multiple credit cards which carry a balance, we recommend paying down the account that has the least amount on it. By continuing to pay the minimum installment on each card, you can then assign any additional funds to the card with the lowest value, to help pay it off sooner. Once the first card is no longer carrying a balance, you can then utilize the monthly installment and the additional funds to put toward the next card and continue through the accounts.

How to Create your Emergency Fund and When to Use It

Budgeting

Creating a structured savings plan is one thing that can set apart the financial dreamers from the financial doers! By setting strict guidelines to your goal, and ensuring the correct follow through with a backed up savings plan, you can be certain of your success in accomplishing your future achievement! One of the biggest obstacles in these plans is the unforeseen, and there is a way to manage even that. Using a well-rounded emergency fund can ensure that you don’t dip into saved funds for unexpected costs such as auto repairs, or medical emergencies. Want to get started setting up your emergency fund today? Follow these simple steps and you’ll be on your way to financial success!

  1. Open a dedicated savings account.
  2. Deposit Funds each month without withdrawing anything.
  3. Start by saving $1000.

– Next save 3 months’ worth of income and expenses.

– Finally maintain 6 months’ worth of income and expenses.

The reason you have this fund is simple, to prepare for the unprepareable. Whether it’s an unanticipated job loss, a costly home repair, or other unplanned expenses, your emergency fund can help you stay afloat when the waters get rough.

The main objective of this account is to have it work for you and your needs! By specifically determining what you define as an emergency (job loss, vet bills, auto repairs) and what doesn’t (last minute birthday gift, broken TV, new clothes) you can generate a structured list to know when you feel safe using those funds, and when perhaps its best to leave them untouched. The idea of the emergency fund is to have it when you need it. By gaining access easily via checkbook or debit card, you can make use the account more quickly when the unexpected strikes.

By generating your own emergency fund you can continue to save for milestones and pay bills, without worrying about the what if’s that lie along the road to the future. Get started with your emergency account today at Timberwood Bank, we’ll help you get to your next savings goal!

Budgeting 101 For Young Adults

Budgeting 101 for Young Adults

Budgeting 101 for Young Adults

You’ve taken all the tests, memorized all the vocabulary, and made your way across the stage. But what comes next? After graduation there are many questions that come with your diploma. Things like, how am I going to pay for rent? Or, how much should I budget each month for food? Not everything in life is as simple as A, B, C, or D. That’s why Timberwood Bank is excited to help young adults with the complex questions of budgeting and personal finance. Find the answers to your financial curiosities with our handy Budgeting 101 study guide!

  1. Identify money coming in. Look past the salary or hourly rate on your contract and focus on take-home pay. How much will you bring in after taxes? When do you see this pay-off – weekly, biweekly, or monthly? Factor in other sources of cash flow too, like earned interest or paychecks from a part-time job. Understanding what you own dictates how you spend.
  2. Establish money going out. Divide monthly expenses into three major categories: fixed costs, savings, and discretionary. Rent, utilities, food, gas, and debt comprise the fixed costs and determine funds for the remaining categories. Savings should include an emergency fund as well as allocation for retirement or down payments on vehicles or homes. Discretionary – the Fun Fund – is the most flexible and can ebb and flow with changes in income and expenses.
  3. Balance steps 1 & 2. The purpose of budgeting is to provide control over your financials. That means ensuring that money going out doesn’t exceed money coming in to keep your head above the debt line. If you find your listed expenses exceed your income, pick one of two options: seek ways to boost income or scale back expenses.
  4. Pick a management system. Armed with a financial plan, equip yourself with tools to help you stick to it. Traditional but trusted, the envelope method helps you keep funds in physically separated expense categories. Once money runs out from that month’s envelope, it’s gone unless funds can shift from other envelopes. A number of free or low-priced mobile apps can give you even tighter control of your budgeting, providing real-time updates of spending and handy visuals of your progress.
  5. Track progress. A long-term financial plan is simply a series of short-term goals. Monthly check-ups help you gauge success from the month, making sure you stayed on target. You can adjust funds as income or expenses fluctuate and spot ways to economize your budget.

Want to take your budgeting up a notch? Meet with one of our Personal Bankers, who will work with you to plan a secure financial future. Give us a call to set up your appointment today!

Taking Baby Steps to Eliminate Your Debt

Shrinking Debt

As of 2015, the average American with credit card debt  owes $15,762 – and that’s just credit. Auto loans, student loans, and mortgages add thousands of dollars and years of repayment to your personal finances. However, debt doesn’t have to be a life sentence. Once you and your partner have made the commitment to work towards financial freedom, follow these steps from Timberwood Bank to begin eliminating debts.

  1. Establish an emergency fund immediately. Unexpected events can take a harder hit on your savings than unbudgeted spending habits ever could. Even if you’re juggling a current debt or two, work to set aside $1,000 as soon as you can in a separate emergency checking account. As you chip away at remaining debt, this cushion can protect repayment plans from being flattened by a faulty car battery or flooded basement.
  2. Adopt the debt snowball method. Instead of listing them highest to lowest by interest rates, arrange debts from smallest to largest. Paying off a handful of small debts in the same time it’d take to chip away at a large one eases burdens, yields immediate results, and provides motivation to continue saving.
  3. Reduce your rates. Refinancing your mortgage and negotiating lower interest rates on credit cards. Reevaluating your health, life, and auto insurance policies may reveal services you don’t need, or it can spur you to shop around for providers with lower rates.
  4. Chop extraneous expenses. Create a list of unavoidable monthly expenses – rent, utilities, gas, food. Create a second list of leisure expenses – gym memberships, cable, eating out, clothing. After budgeting for the necessities, pick a few discretionary categories you’d like to keep with reduced spending, but cut the rest. Putting your spending on a diet is easier when you allow yourself a few modest outlets.
  5. Evaluate progress monthly. Creating a multi-year financial plan for eliminating debt is the first step, not the only one. Perform a monthly check-up on your plan to continue spending within your budget. It can also provide a boost of encouragement when you see progress, and you might spot ways in your new financial routine to make your budget even more cost-effective.

It may be a long road to eliminate debt, but it’s within your ability to travel it. Don’t go it alone – contact one of our advisers today to help you create and stick to your financial plan.