Yes, I like this idea! I know you're curious about what "mad money" is. A long time ago, a young woman went to a party with a friend, but her friend left her at the party with no way to get home. So, the young woman was upset that her friend left her at the party, but she had enough money in her shoe to take a cab home. She thought to herself in the cab on the way home that it was a good thing that her mother had taught her to save money for times like this.
Thank goodness this young woman had the foresight to hide her mad money so she could take a cab home when her friend abandoned her. Do you understand? It's important to have an emergency fund, whether it's from gifts or savings. You might ask, "How do I do this?" Well, these tips will help you figure out what you can do:
- You should use the money in your emergency or "mad money" account for household emergencies, personal emergencies, or if you can't work anymore. Don't spend it on other things, like bills, travel, etc. Do you get it? It's a savings account that you shouldn't touch unless it's an emergency!
- Put a certain amount of money into your account every week, every two weeks, or every month. You might want to have your payroll department set up automatic deposits to your account. Or, you might want your bank to move a certain amount of money from your checking account to your emergency or "mad money" savings account automatically.
- Make sure that the bank account where you keep money for emergencies or fun gives you the most interest you can get for this account. Find out from as many places as you can how to get the best interest rate you can. Check with your bank, the newspaper, the Internet, and other places to find out what the current interest rate is. You want to make sure you can get to your money quickly and easily if you need it in a hurry.
- Try to save at least two to three months' worth of your monthly salary so that if you lose your job, you can pay your bills for at least three months. This amount of time should give you the breathing room you need until you find a new job.
- Open a savings account just for your emergency fund or spending money. No matter what you want to call it, just set one up!
Setting up an emergency or "mad money" fund will give you more peace of mind in case you need money in an emergency. So, you'll be better off if you start saving money for a rainy day as soon as possible. Make sure that the amount of money you put into your emergency fund or "fun money" is something you can afford. Save as much as you can without putting a strain on your overall finances or those of your family. So go ahead and start right now!
