Moving on from the last blog on Budgeting (if you missed it have a read here) where we analysed our expenses and set up a basic Budget account.
Now the next step is to have funds ready for the inevitable.
While some might call a “Rainy Day” account, we describe it as money kept aside to give you options when the ‘Shit Hits The Fan’.
Introducing, the SHTF account.
We all know that at some stage the car will need extra repairs, the washing machine might pack up, there are unexpected medical expenses, a family emergency etc etc.
So ideally, as well as working on the regular amounts we know we need to spend to keep the household going, it is smart to be building an amount in another account for emergencies.
The amount you put away will firstly depend on your income/expenses and what’s left over. If you cant spare much, don’t worry. Just work away with what you can and it will build up. A portion of a bonus from work, money from selling unwanted stuff, or some of your income tax refund will all help.
Depending on your account set up for your mortgage, the SHTF account and the budget account can be offset against your loan, reducing interest and shortening the term of the loan.