Remember how everyone from Dad to Great Aunt Edna told you to save for a rainy day? As much as you want to pretend that’s just old fogey logic and has no place in your hipster lifestyle, stop and think about it again. That swinging carefree attitude might have worked in college but not so much when you become an adult with a job and responsibilities.
How will you get to work when your car craps out and you don’t have money for repairs? Or when the dog eats an entire chocolate Easter Bunny and needs to have his stomach pumped – quickly? When an errant pass in a spirited game of touch football in the front yard goes through the neighbor’s window? Or worse, unplanned medical expenses.
The point is that any of these and a variety of other minor/major emergencies can happen at any time. You need an emergency fund. Period. Start by saving a thousand dollars. While not a big cushion, it can handle car repairs, medical visits, and assorted life events up to a point. The ultimate goal is to have six months worth of income readily available for whatever life throws at you. If you’ve never tried it, you don’t realize how much daily stress is lifted from your shoulders when you’re not flying without a net.
Imagine you suddenly lost your job, through no fault of your own. Maybe it was downsized out of existence. No worries. You’ve got six months to find one, while your buddy Fred, who was also released and was of the opinion that your emergency fund idea was crazy, is left in shock to pick up the pieces. And he better do it quickly if he wants to keep eating.
Just our two cents worth from Young Wealth.
The Young Wealth Team