The Emergency Fund

I'm sure we've touched on this in other posts, but this week I want to talk about the importance of having an emergency fund.

Trying to save money when you're drowning in debt is unlikely, but once you can start putting money away, you want to make that a priority.

1. Show me what you're working with. Are you living within your means? 
1. First review your expenses. Do you know what your total expenses are each month? 
2. Next, calculate your net income. How much are you bringing home? 
3. Now, do the math. Subtract your expenses from your income. Do you have a positive or negative balance? 
1. If you have a negative balance, it's important to carefully examine your expenses. 
2. If you have a positive balance, that's great. There still may be room for improvement, but you're definitely on the right track. 
2. Track your spending for a few months. This will help you get a clear picture of what's going out to what is coming in.
3. Create a budget - Once you have a better understanding of where your money is going, it's a great idea to write it down.
1. You can use pencil and paper or a simple spreadsheet/document. 
2. Start with your income. 
3. List expenses and subtract. 
4. Write down the amounts that go to savings etc.
4. Begin to pay down debts
5. Emergency Fund - Once Debts Have been paid or even before(if possible), start saving.
6. Find an interest-paying account that meets your needs for deposits. 
7. Continue to build fund until you've met your goal.

An emergency fund isn't built overnight, but it does require a plan and implementation. No one is protected from emergencies, but some are more prepared than others. Taking care of expenses is a first, but don't stop there. It's too easy to spend "extra" money mindlessly, but if there's no emergency fund, you're a walking target. It can sometimes feel like "when it rains, it pours". It'll be one thing after another and without a "way out" or "safety net" the toll it takes on you can be overwhelming. A little sacrifice today may save you tomorrow.

Just as you'd wear a safety jacket when rafting, prepare for the unexpected by having an emergency fund.

 It may save you!