This week on The Wealthy You; the importance of emergency cash.
Life happens and, for the most part, it is the most exhilarating journey you will experience while on Earth. I have heard some people refer to life as a “holiday on Earth”. Everyone’s life is different and each individual will perceive life in an individual way or manner. But one thing that is expected with your journey of life are emergencies. We all have them and they will make themselves obvious in your life at the most random and inopportune times. They will be stressful and they have the potential to drastically alter your life completely. Being able to handle those emergencies from a financial perspective will eliminate one pain that will be experienced during emergencies. Because feeling the pain of not being able to afford the emergency from a financial perspective and the pain of what the emergency manifests as will make the pain more painful and seem to last longer. Not having the proper financial resources during an emergency will make you pay for that emergency over the long-haul, stretching it into the future and making the pain last for as long as you are paying it down if credit or debt was used to pay for the emergency. That pain can be eliminated if you keep cash in a savings account that is strictly used for covering those emergencies.
Because everyone are individuals, we all go about building our emergency savings in a different capacity. Some may even call it something different than ’emergency savings’. I have heard of ‘oh shit accounts’, ’emergency money’, ‘disaster cash’, and ‘a place where I keep money only for when my world is cracked open like an egg’. But they are utilized in a very similar manner, regardless of what you call it, it is money that is available for you to use if legitimate emergencies occurs in your life.
All financial literacy experts, financial advisors, money managers, personal money motivators, money teachers and anyone else that works with personal finances agree that emergency cash is an essential part of smart money in your life. It is IMPOSSIBLE to become The Wealthy You! without an adequate amount cash set aside for emergencies. Those experts will recommend different strategies like; $1000 minimum in savings (Dave Ramsey), 3-6 months of expenses in savings, 3-6 months of income in savings, or even a years’ worth of income set aside. If you have a spouse and children but you are the only one working because your income can support the whole family, then you may want to lean closer to a full years’ worth of income set aside (emergencies hover around and are based on people. The more people in a household, the more likely an emergency will happen than two people in a household). But on the other hand, you are married with zero children and both you and your spouse work and have side gigs so that the two of you each have two or more sources of income, then having 3-6 months of expenses may be more suitable for your situation (less people and expenses in the household but more fluid cash flows through the household).
Everyone’s situation is different, so it is of the utmost importance to take accountability of your current emergency cash situation and take ownership of your emergency money. Formulate a plan that works best for your household and concentrate and focus your full attention on achieving and fulfilling that mission. The human mind creates more of whatever it focuses on. The more you focus on stresses in your life, the more your life will be stressed out. The more you focus on wealth, the more your mind will find opportunities to build, create and produce wealth. The more you focus on building your emergency cash pile or collection, the more you will build upon it every day until you are finished. Then you move onto the next mission to focus your mind on, such as becoming The Wealthy You!. Make it a habit and do it every day.
Next week on The Wealthy You!; inflation protection.
Become The Wealthy You!