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Build an Emergency Fund

You have a superpower - you can turn financial emergencies into simple inconveniences! All it takes is having some money set aside to cover common issues, like a car repair, replacing home appliances, or giving you time to get back on your feet if you’re ever between jobs.


The rule of thumb for emergency funds is to hold somewhere between 3-6 months of expenses in cash. That’s because the amount of time it typically takes to find a new job if you’re laid off is (you guessed it) about 3-6 months. Of course, ideally, you’re not laid off in the first place, but as noted in the first paragraph, having some cash set aside can be really helpful when other things go wrong.


A common strategy I encourage the people I work with to use is to open a separate savings account at their bank, and automatically direct some of their paycheck into it. You might even be able to get your bank to hide that account from you when you log in, to save you from yourself (don’t worry, I’m sure you don’t have a spending problem, but other readers might).


Taking this strategy a step further, you could consider opening an online savings account - often these accounts pay higher interest, so you can get a little more out of the money that’s otherwise just sitting there. If you open a separate account, just make sure you can get it out when you need it - an emergency fund is no good if you can’t get to it when something comes up.


 

As always, keep in mind that you don't have to go it alone. Check out my website to see what it's like to work with me and reach out if you have any questions.


If you found this post helpful, help spread the word! But remember, this is solely for educational purposes - it's not advice.


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