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Savings: How to provide yourself financial help

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Savings plan

Image by alancleaver_2000 via Flickr

Everyone should have savings plan. Saving allows you to build an emergency cash fund, which should ideally be composed of the equivalent of 3 to 6 months living expenses. This financial cushion allows you peace of mind and freedom with the rest of your savings, which you can use to pay for education and college for example, while your emergency fund is more for sudden personal needs, such as a health emergency. Also, by having an emergency fund, you can take more risks when you are investing your available money, because you have peace of mind that if your investment risks are fruitless, you are not immediately in trouble, and you have time to regain your loses. This way, you provide your own financial help. You can then allow yourself greater calculated risks, increasing your opportunity to earn more, since investment returns are generally, but not always, proportionate to the risk you take. Without this emergency fund, any unexpected expenses can ruin your long-term plans.