It’s Monday and I have a question. Is your money working for you?
Well, I’ll get right to the point. What’s in your emergency fund? An emergency fund (cash cushion, cash reserves) whatever you call it is an account you have to bail you out if something unexpected happens – your car breaks down, you get sick and can’t work, you lose your job – you get my drift. So how much do you have packed away?
If the answer is nothing or you aren’t sure, now is the time to replenish it or start one.
To quote Denis Waitley, “ We should Expect the best, plan for the worst, and prepare to be surprised.” But I’m not a fan of surprises that put me in a financial bind and that’s why having an emergency fun is so important. So how much should you keep in your emergency fund – well it depends.
How does it cost to repair your car? Pay your expenses for a month or two or three? And so on. So start by thinking about how much you need to have on hand. $5,000, $10,000 or more to tide you over. And if that is way too much start where you can start and add to it every time you get paid until you build up a comfortable amount. Then as you use it don’t forget to put the money back. And here’s the key, don’t keep the money in your regular checking account, set up a special account to there will be less temptation to use it for non-emergencies.
And, that’s the minute for today. I love helping people with all aspects of their financial lives. If you have a question, send it to me at email@example.com.
Thanks for listening and as always remember that minding your money really is the path to a richer life!