Start an Emergency Fund
Have you ever been in a situation where you needed 100 bucks that you just didn’t have? No, I don’t mean you needed 100 bucks for a new stereo. Something more important like you needed it to pay for a new tire or something you couldn’t function without. In this case, you couldn’t drive.
This is the perfect event when an emergency fund would come in handy.
A typical recommended amount for an emergency fund is 3 to 6 months of your living expenses. This is usually meant for adults with full-time jobs, but will work just as well for teens. It may take a little while for you to save this much, but it will be worth it.
Let’s do some calculations for an example.
If you spend $200 dollars a month, you should have at least $600 dollars in an emergency fund. If you make $75 dollars per week, you will have $300 per month and will be able to save $100 dollars each month towards an emergency fund. In about 6 months you’ll be all set!
I know, that sounds like a long time, but it all depends on how much you are able to put aside for savings.
The size of your fund will depend on your expenses. If you only spend about $20 per month, you’ll only need about $60. Of course, you can adjust it when you start making more money.
Besides immediate emergency expenses, it can come in handy in other situations too. If you are working at a job you hate and you have to leave, you’ll be fine for at least three months, right?
When you have this money set aside, you should put it in the bank. If you only put it in your local bank, you’ll probably only get about 0.5% interest, which is not very good. This means that if you have $100 in the bank for 1 year, they will only pay you 50 cents. Not much at all.
This is where online savings banks come in. The Orange Savings Account. Great rates, no fees, no minimums. They are my favorite online savings account. The more you have in there, the more you get paid.
An emergency fund is also a good habit to get into for the future. Having that security will relieve a lot of possible pain in future problem. Avoid problems and save now.
