In the Czech Republic, Financial Reserves are the bane of many families. They often have no reserves at all or very little if any, and as a result, they are often afraid of what is about to happen. Financial reserves are money set aside for a rainy day. Its purpose is primarily to cover the risks associated with unforeseen events. Without it, we would be in a very precarious situation and often fall into the debt trap.

Size of financial savings
What should be the size of the financial savings of an average Czech family? This is not so simple. Depending on the size of the household and the household income, it should be at least three times the monthly expenditure. In the event of unemployment, this will provide bridge funds until re-employment. In other words, if your monthly expenses are 30,000 yen, your financial reserves need to be at least 90,000 yen. There is no ideal size of financial reserves; some people feel comfortable with six months\’ worth of reserves, while others only need two months\’ worth.

How to create a financial savings account
A financial savings account can usually be created by saving money left over in your budget. If possible, deposit the money in a bank and keep it in an account from which you normally do not withdraw money, so that you do not unnecessarily draw down your reserves. But what if you don\’t have enough money to build the necessary reserves? Of course, you can live without reserves, but if you don\’t have the opportunity to save, you should save as much as you can to at least have enough money left over to live on. It probably won\’t help you with long-term problems, but it will still help you a great deal. Going into debt because of a short-term shortage of funds is the surest way to fall into the debt trap.

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