Step 1-Savings Is the Key to Debt-free Living

How do you feel about saving money?

Let us know with this one-question survey:

Feelings about Savings
Which best describes how you feel about saving money regularly?

Savings Is the Key to Debt-free Living

Most debt that overwhelms household finances typically results from three primary situations:

  1. Job loss or household income reduction
  2. Overspending on consumer expenses, and
  3. Excessive medical bills

Divorce, addictions, and lawsuits also find their way onto many lists of the top reasons for consumer debt.

Because an ounce of prevention is worth a pound of cure when it comes to debt, we prioritize savings above all other topics in this course. Sufficient savings will…

  • minimize the possibility of incurring future debt
  • prepare you for expensive medical issues
  • secure your finances in times of unemployment

Cultivating a mindset around savings can also move you away from mindless spending (i.e. impulse) and toward purposeful money decisions.

Save for Emergencies

If you’re not sure what emergency savings funds are for, remember this:

The purpose of an emergency savings fund is this: to make up for lost income.

  • Job loss
  • Temporary income reduction
  • Self-employment income troughs

Short-term Savings Goals

Additionally, households should consider saving for future non-emergencies, such as:

  1. Vacations
  2. Birthday and Christmas gifts
  3. Vehicle repair and replacement
  4. Appliance and furniture repair and replacement
  5. Future splurges and impulses

For more information, check out Money Fit’s ultimate savings guide here.

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