Page 68 - Book2E

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budgeted and saved for. Determine what those periodic expenses are and reserve the payment in your savings account. Then when the expense comes due, you have savings allocated to cover the periodic expense instead of needing to rely on credit cards.
Establishing and using a budget is the best tool for planning for and meeting periodic expenses. Consider a budget a roadmap or strategy plan that gives you a heads up on anticipating these future expenses. Plus, using a budget and the discipline of putting money away each month to cover those expenses boosts your self-confidence and sense of control over your finances.
One of the smartest and most effective ways to have money on hand for periodic expenses is to get in the habit of “paying yourself first”—or putting some money in savings as soon as you receive your paycheck. In general, save 10% of your income, and then never touch it. It’s dif- ficult to save if paying all of your other expenses comes first. Pay your- self (into a savings account) first and then pay your other bills. Saving may never be easy but it can become a habit. Surprisingly enough, you can become wealthier in the process. Some time ago a very wise man counseled each of his grandchildren to save $10,000 and told them that once they were able to save this amount, they would have a successful future with few financial problems. One of his grandchildren later said that after he had saved $10,000, he could not bring himself to spend it, but instead saved another $10,000 and then another. By the time he was in his mid-twenties he had $30,000 for a down payment on a house; and he then started saving all over again. What could possibly be better than learning how to be financially disciplined!
Emergencies
It’s an old but true saying: “Always expect the unexpected.” Different from periodic expenses that can and should be anticipated and planned for, accidents, illness, the furnace or air conditioner going out, car or
Saving for Major Purchases