If you're in the position to save for unexpected expenses, the time is always now.
If you've ever been in a situation where money felt tight, and you were scrambling to find a way to pay for an unexpected bill you're not alone.
Setting yourself up for financial freedom starts with setting up an emergency fund. If you don't have access to cash for things you can't predict, you could lose a lot of the financial progress you've made.
So let's start off with, why do you even need an emergency fund?
An unexpected loss of income
Unaccounted home repair
A big purchase
Want to start a business or find another job
Peace of mind (and freedom!)
Having funds set aside for any of the situations above - and many more - can offer you financial security and can provide you with choices in situations where you need to figure some things out. An emergency fund can save you from an enormous amount of stress and potentially putting yourself in a dangerous debt cycle.
How much should you keep in your emergency fund?
It's almost impossible to know precisely how much money you should save. If we've learned anything from the pandemic, is that sometimes you don't know what other factors - like inflation or a recession - could contribute to the amount you should have put aside.
The rule of thumb is to have 3 to 6 months of expenses set aside.
The best thing you can do is to understand what your bare-bone budget might look like, see how comfortable or uncomfortable you are with that, and go from there.
Pro tip: Consider how much debt you'd be comfortable with if you were to run out of emergency fund money.
If you don't have an emergency fund started and feel overwhelmed or don't know where to start. We suggest getting started with a complimentary 15-minute session with you. Through this session, you will get a personalized financial overview of the areas that your finances need.