Steps to Financial Security - Baby Step

Posted on Tuesday, February 12, 2019 in Financial Education

Step #4Baby Step #4

Save 3 to 6 Months of Expenses for Emergencies

It is always a good practice to save 3 to 6 months of expenses for emergencies. This step is a little different than the one in step 2. This emergency fund is set aside for bigger emergencies like losing your job or being unable to work due to an illness. Emergencies are difficult enough as it is and going into debt is an extra burden that you don’t want to have to worry about. If you do lose your job unexpectedly you have 3 to 6 months to get back on your feet.

  • Set a clear goal and stick to it
  • Get a second job, or turn your hobby into a second job
  • Use a high-interest account for your savings
  • Keep your emergency savings in a separate account from all other accounts
  • Automate your saving’s contributions. When you set your savings to automatically come out of your check you are less likely to spend it
  • Let go of your credit cards
  • Avoid impulse buys, take a day or two to think on potential purchases
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