2. Create A Safety Net
Why do you need an emergency fund? For emergencies.
Thanks, Greg. That was insightful.
But really. We all know what an emergency fund is, but how many of us actually have one? A ridiculous 35% of Americans only have a couple hundred dollars accessible for a worst-case scenario.2 If you have to evacuate or pay for funeral expenses, two or three hundred dollars isn’t going to get you far.
Peace of mind is hard to find these days, especially if you stay on top of current events. But at the very least, you can give your finances a leg up so the money is there if you need it. That’s one less thing to worry about in a disaster situation. How much should you save? There are many differing opinions on this, and it will largely depend on where you live, how many mouths you have to feed, and your debt load. That said, six months to one year of basic living expenses should give you some breathing room if disaster strikes.
3. Debt No More
If you are paying off loads of debt, you won’t be able to put much aside for your emergency fund. It may not be fun, but change your lifestyle so you can abolish that debt once and for all. That alone will bring more freedom and peace to your life. Do you really want to be worrying about making your next payment if the shit hits the fan?