Experts say that savings can be made at any income level. Moreover, saving money is not only possible, but also necessary. Any person, regardless of income level, may experience force majeure situations: job loss, illness, urgent car repair or replacement of major equipment - there should always be money for a rainy day.
Studies show that people with certain savings psychologically feel more comfortable and confident in the future. Recently, the issues of financial airbags are becoming increasingly relevant for modern people. What is it, how to start making savings and what is the optimal size for an average Russian family - these and other issues will be discussed in this article.
What it is?
In simple words, a financial airbag is accumulated funds, various kinds of savings that will help a person solve his problems in difficult times of life. That is, its purpose is quick insurance of its owner or members of his family during the period of force majeure, allowing you to maintain a familiar lifestyle without any critical restrictions.
Why is it needed?
As noted earlier, the main reason for creating a financial family airbag is protection against unexpected loss of basic income. No one is safe from this. Anyone, even the most high-class specialist, may lose his job. In this case, it takes time to restore position to find a new job. Finding it is not always easy and fast. And the expenses do not go anywhere. It is the previously deferred savings that will help to stay “afloat” while the person is looking for a new source of income.
It is during such life periods that a person most often goes to extremes, for example, after some time searching for work, in the absence of decent offers, he gets a less attractive or low-paid position, which in itself worsens the previous standard of living. This is due to the fact that there is no time and money to look for a decent option. The consequences of this condition sometimes have to be raked for more than one month. In the case of those who have accumulated a financial airbag, this is most likely not to happen. Such people do not have to get into a debt hole.
The main thing is to start making savings
In reality, there are not so many options for creating a financial airbag, since money never appears out of nowhere. To start making savings, you will need to either reduce your expenses or increase your income.
One of the easiest and most common ways is to deduct 10 percent of the salary. Although it is worth recognizing that this method does not work even on paper, because to create a financial airbag for one month, a person will have to accumulate money for 10 months, and for one year - 10 years. But here it is worth noting that savings should not be the goal of life. Therefore, this method is ineffective, because, in addition to everything, a person still needs to make money on a car, a house, raising a child, etc.
Specialists recommend revising their expenses, taking a responsible approach to the issue of personal finances, and striving to allocate a larger percentage for their savings. It is also necessary to make efforts to create an additional source of tide of funds to the family budget, which in the future may become the main source for generating savings.
How to calculate a financial family airbag?
First of all, it is necessary to calculate the income and expenses of the family. According to statistics, many spend exactly as much as they earn. The recommended amount will be the amount of accumulated money, which will last from 6 to 12 months, provided that there is no permanent source of income.
To determine the amount, you need to calculate how much money is spent each month on food, utilities, transportation, hygiene products, and if the family has children, you also need to take into account the costs of the kindergarten, school, etc. For an easier way of calculating, it is recommended write down all the funds spent by the family for a week or a month, while it is important not to forget that in addition to regular spending, there are irregular and unavoidable expenses, such as buying clothes, shoes or car maintenance.
After the analysis, you can quite easily calculate the size of a financial airbag. To do this, you need to take your monthly income and multiply it by the number of months. You get the minimum amount of savings that you need to strive for.
Formation Features
There are three main principles for creating a “reserve fund”:
- Immunity. It is strictly forbidden to spend deferred money for other needs not provided for by the goal of creating savings. It is best to initially determine for a situation where you can use the means of a financial pillow.
- Fast access. As soon as that important moment has come, in order to use the money reserve, a person should have the opportunity to gain access to his accumulated funds in the shortest possible time. For example, you would not have to sell real estate.
- Inflation protection. A convenient option is to open a long-term replenished deposit in the bank at interest.
How and where to store money correctly?
According to the second principle of creating a financial “pillow”, the accumulated funds should be in easy access, therefore it is recommended to keep money in the bank on deposit with the right to withdraw at any time. This will not only provide an opportunity to quickly use the funds, but also save the financial airbag from inflation. When the amount of cash over time becomes quite impressive, it is best to distribute savings accounts, rather than storing everything in one bank.
Another important point is the storage of money in highly liquid currency. Such a currency may be the dollar or the euro. According to analysts, the sale of these currencies will not cause any serious problems. In addition, they are much less subject to depreciation than any other monetary unit, such as currencies in the CIS countries. Therefore, the choice in this situation will be quite obvious.
In addition to the main purpose, to satisfy their physiological needs and pay bills, in unforeseen situations, an airbag acts as a psychological defense. A person who knows that he has the right amount of money in his bank account will feel financially calmer, unlike those who live only one day.
Reserve fund for borrowers
As practice shows, the creation of a financial airbag for loans is a prerequisite for the borrower. Indeed, in the event of force majeure situations and loss of income, you can easily fall into a serious debt hole, which will lead to a damaged credit history, litigation, confiscation of collateral, etc. A person who has undertaken debt obligations needs to have a few payments, so that in case of what doesn’t stop regularly paying under the contract.
A financial airbag for a businessman?
In business, as elsewhere, there are "black days", and much more often than ordinary people. Savings play an important role for people doing their own business. They act as a kind of buffer. He, in turn, will allow the entrepreneur to take risks in order to obtain greater benefits. After all, a person always feels much more confident when he knows that he still has a reserve amount of money in a secluded place. And in the event of an unsuccessful transaction or an erroneous choice of goods, it can always be put into circulation.
However, it is not recommended to get involved in this, otherwise the reserve fund will lose its definition and simply go into assets. In this case, the total capital of assets, of course, will increase, but financial security will be in jeopardy. At the same time, savings can save entrepreneurs in the most difficult situations, especially if everything is already lost. In most cases, people who do business very quickly and professionally approach the issue of restoring their lost state, because they already have proven contacts and knowledge accumulated over the years.
Conclusion
A financial pillow, created according to all the canons, will give an opportunity to a person and his family not only to save themselves from hunger in case of loss of work or other unforeseen situation, but also allow to lead a very ordinary lifestyle for plus or minus 6 months. When a person has an untouchable financial reserve, he will feel confidence and security, and a sudden situation in the form of a car breakdown or flooding by neighbors will not be able to unsettle him, since you can always count on plan “B”.
It is worth remembering that, having accumulated the necessary amount, it is impossible to stop, because no one knows whether future assumptions will be correct. Saving money should become a habit of any person. Indeed, in fact, it is not necessary that force majeure situations should be unpleasant, perhaps a person will be able to fulfill his dream with the help of these reserves.