So you’ve stashed a significant amount of money away in your emergency fund. Congratulations! But now that you’ve accomplished your savings goal, you might be wondering, what’s next? In this
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Why have an emergency fund?
One of my favorite sayings that you can apply to your personal finances is “When you stay ready, you never have to get ready.”
An emergency fund is important because just in case something happens, you have money set aside for unexpected expenses. It can also save you from going into debt.
For example, if you lose your job, at least you have money to cover your expenses for a few months.
Read >> Emergency Fund Dos and Don’ts
How much should you have in your emergency fund?
It really depends on how much you think you’ll need. Everyone’s savings target will be different.
However, conventional wisdom says that you should have anywhere between 3-12 months of expenses saved in your emergency fund.
How did I do it?
I started my emergency fund by saving $1,000.
This is actually what personal finance guru Dave Ramsey suggests as well. In Baby Step 1, Dave Ramsey suggests saving $1,000 in your starter emergency fund for when something unexpected comes up.
After you’ve saved $1,000 now what?
My Top Emergency Fund Milestones:
- Save $1,000 in emergency fund
- Save $5,000 in emergency fund
- Have a $500 to $2,000 buffer in my main checking account. This pot of money serves as the first line of defense and gives me some leeway to spend without having to dip into my emergency fund.
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This episode of The Thought Card is sponsored by my brand new course Back to Budgeting Basics. In this fundamental budgeting course, I teach you how to create a goal centric budget that helps you accomplish your short and long term financial goals faster. I also teach you how to track where your money is going every month, organize your banking and create a simple money routine.