It falls in the category of “things you know you should do but seem like they can wait.”
If 2020 taught us anything, it’s that being prepared for the unexpected needs to be a priority for everyone, regardless of life stage or career. Even high income earning households with comfortable cash flow need to anticipate life’s curve balls.
It may seem like a daunting prospect, but breaking it down into small steps can make building an emergency fund much less overwhelming.
First, let’s get clear on what an emergency fund is…and what it isn’t. An emergency fund is money you set aside for those unexpected surprises life will inevitably throw your way. Think of it as a safety net for when things such as any of the following occur: job loss or furlough, an injury or illness that prevents you from working, natural disaster, major car or house repairs – the list goes on and on.
An emergency fund is not to be dipped into to cover last month’s expenses when you overextended yourself, nor should it pay for the renovation you’ve been dreaming about for months. Instead, let your emergency fund be there like a long-time, trusted friend who provides safety and security when you need it most.
Click here to download our step-by-step guide to building an emergency fund that will be there for you when you fall on hard times.