- Cash Reserve

7 Tips For Creating Your Cash Reserve

Save Money!

I know it is not always easy but we must save enough to have an emergency cash fund

Our cash reserve/emergency cash fund should not actually be in cash rather in a bank account, available at short notice if we need it.

An important component in our financial planning, is the cash reserve fund known also as an emergency cash fund. When life throws us something unexpected, we’d like to know we are prepared, if not for the event at least to deal with whatever the financial impact it has. A cash reserve is essential but is often neglected. Throughout life there are unknown expenses, which come with little or no warning. Your car breaks, you lose your job unexpectedly or you need emergence dental treatment. How do you deal with these issues? Having an emergency cash fund will allow you to relax in the knowledge that you can cope better with these financial challenges.

1. Prioritize – put this into your household, or business budget today!

2. Ideally a cash reserve should have a minimum of three months worth of your total outgoings. Calculate what your essential expenses are and build up 3-6 months worth. If you need to use the money you should know which expenses you can cut back on and which are absolutely essential, in order to make the money in the emergency fund go further.

3.Make space to save in your budget. If you don’t have any excess for savings in your budget then what can you cut back on? Will cutting back on some of your bills for 6-12 months give you enough to start?

4. Make a monthly direct debt from your bank account into the cash reserve account. The direct debit should come out of your account right after you get paid. This is a priority, don’t wait to see if there is money left at the end of the month for this. Too frequently there is no money left. Learn more about Israeli banking

5. Invest the money in a short term savings,Israeli Pakam, money market or similar fund*. You want to be able to take the money out when you need it without having to wait, or suffering a penalty.

6. Put any unexpected bonuses or extra income that has not been assigned to your regular income in the fund.

7. The fund is for emergencies and financial crises
– not for a vacation. Do not abuse the fund and stay focused on its purpose.

* This is general advice, for specific advice suited to your needs please contact me or speak to your banker.

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