Although saving money is hard sometimes, everyone from your tax preparer to your bank will advise you to have at least a minimal emergency savings buffer. That means putting aside some money that you can use in case of an emergency, without having to resort to high interest personal loans or credit cards. That way, if you have an accident or your home is damaged by a storm, you can cover medical bills and repair expenses at short notice, without landing into debt.
The first thing you have to know about your emergency savings buffer is that it has to keep growing. Inflation is a real thing, and prices constantly grow even if we’re not paying attention. The amount you’d spend on a basic home repair 5 years ago will no longer be enough to deal with similar repairs today. So always pay close attention to generic price increases and adjust your savings buffer accordingly.
Another detail to take into account is the strategy you have to replenish your savings buffer and how much it will take to implement. Sometimes you’ll have to plan on spending less on food, entertainment and random weekend trips just to save a little more to restore your savings buffer.
Finally, think about tax-related expenses and requirements. They can impact your ability to save money, so having a dependable tax accountant Highlands Ranch professional to get advice from can be a very good idea.