1. A Healthy Financial Picture Should include the following: Monthly Spending Budget Emergency Savings Flexible Spending Account Debt Elimination Plan Disability Insurance Retirement Savings Plan Will and Power of Attorney

2. Emergency Savings Part One ($500 - $1000) Define emergency now You should base your definition on something that puts your livelihood or your family's safety at risk and then stick to that definition so you don’t dip into your fund. Why this amount? So you can hopefully cover a car repair or house maintenance bill or insurance deductible.

3. Emergency Savings Part Two Serious health problems and rehabilitation time can side line a person for three months or more and it can take an average of six months to a year to find another job if fired or laid off.  3-6 months of income tucked away may give you a much needed cushion to soften the impact until you are able to generate income again.

4. While preparing for loss of income is wise, it might not be reasonable for most. Even the most disciplined budgeter might not be able to save three months worth of income within a year’s time and many of those emergencies discussed in Part 1 can take a financial toll. You may consider postponing if: You are spending over 70% of your income on bills Your credit card bills have high interest rates and need to be paid off You are neglecting your retirement savings Some advisors suggest that for big emergencies, financial flexibility is the key (ex. having access to credit cards and home equity lines of credit, which are only available to those with good credit scores).

5. Put it under your mattress? Most savings account at a bank will have an annual interest rate of around.2%, while some higher yield savings online accounts have over 1.0%. In 1 year, with a higher yield account, the interest for $6000 saved will be $40 more than in a local bank savings account and for $12000 is $120. Over time this value will compound and gradually increase every year. Take the time to investigate options so you can make a little money on your emergency savings. Contact your bank to see what they offer or you can find offers on-line that are competitive and low risk given that they are FDIC insured up to $250,000. Check Bankrate.com to compare offers on High yield accounts.

6. Ideas on How to Start Building That Emergency Savings Use your IRS refund. Seventy percent of the population get an average refund of $2,144, which would be a good start for your emergency fund. However, if you are one of the many to get that size of a refund, why let the federal government hold onto that interest free. By calculating specific withholdings on your W-2, that refund could translate into an extra $178 per month that could go toward bills. The Internal Revenue Service website, IRS.gov, has a calculator that helps you estimate how much should be withheld in order not to owe come April.

7. Other Ideas Yard sale, online sale (eBay.com, Craigslist.com, Amazon.com), consignment stores, flea markets Use less heating/air conditioning – for an eight hour period of time you save 1- 2% on your bill for every degree you lower the temperature in the winter and raise it during the summer. Programmable thermostats will automatically adjust the temperature based on need so that the air conditioning will go off when you are at work or the heat will decrease when you are asleep. You can buy these at independent sellers or contact your utility company since some offer that technology. Further, many utility companies offer home energy audits at low to no cost. These audits provide information on the inefficiencies in your house that may be costing you more on your heating and cooling.

8. Other ideas...continued Ask your car insurance provider about discounts good driver, good student, multiple car, etc. Cash in whole life insurance and buy term life insurance. Cancel collision and comprehensive coverage on older cars to save on premiums. Eliminate cable/satellite plan, call waiting, caller ID. If you have a cell phone and land line, possibly eliminate one. Decrease the amount that you eat out at restaurants; take lunch to work. Go grocery shopping with a list and after you eat to minimize impulse buys or other excessive spending; buy generic products and use coupons

9. ….……… A Few More Part-time work. Bundling, or using one company for multiple services in order to receive discounts (i.e. all car insurance under one policy; cable, internet and phone under one plan; etc.). Decrease gas use through public transportation, car pools and walking or using a bike (see assistance.ky.gov for more information on alternative travel in Kentucky). Choose plans with higher deductibles on car, house and/or health insurance (if you are in good health) – set savings aside to cover deductible and everything else is extra money to put into your high yield savings account or Flexible Spending.