Lesson #2.1 Life Happens, and Trouble Doesn’t Set Like The Rain (2:10 mins)
If you’re thinking ‘wait, in the last rule you just said you need to have a plan and now you’re saying this,’ then I get you.
You absolutely need to have a plan for your money. But your plan must have space for pit stops and detours.
Because life is what’s happening while we’re off making plans.
You get a flat tire, pets get sick, family emergencies, and all sorts of other possibilities attempt to derail your plan.
It’s not a matter of if, but when.
And because it doesn’t set up with dark clouds on the horizon (like rain does) it likely comes when you least expect it, so you need to be prepared.
That’s where emergency funds come in.
What is an Emergency Fund?
An emergency fund is a stash of cash that is easily available for use in the event of an unexpected expense or emergency.
The idea is that these funds are separate and should only be used when absolutely necessary and should be available to sustain you when life happens until you can get back to normal.
Who Needs One?
Everybody!
Your emergency fund is the buffer for preserving your financial situation.
It’s what stops a bad situation from being a catastrophe, ruining all your efforts for financial success.
That’s why having an emergency fund is the first and most important step in learning about winning with money and why BUILDING YOUR EMERGENCY FUND IS YOUR SOLE FOCUS/GOAL until the preliminary fund is created.
That’s right …. student loans, credit card debt, and everything else gets the minimum payments until you have AT LEAST $2500 saved in your emergency fund.
This is so important it needs a public service announcement 🙂
So now you know you need it, and it’s important.
So the next logical question is …
How Much Do I Need In My Emergency Fund?
In the next sections, we’ll talk more about how to set yourself up to be prepared for any thing.
FINAL WORD: It’s arrogant to think that nothing bad will ever happen to you in your life. So be prepared with an emergency fund.