At my recent post on how to allocate cash flow, I highlighted that one of the first steps should be starting an emergency savings fund. Establishing such an emergency savings fund is one of the foundational components of developing your personal finances; many personal finance gurus agree it should come before paying off debt at high interest. While emergency savings might not seem exciting at first glance, smart personal finance relies heavily on savings rather than flashy investments – this post will discuss why and how much emergency savings is necessary, with recommendations for where this money should be stored.
Why Save for Emergencies? mes Unfortunately, certain situations in life may arise that are out of our control and necessitate immediate cash. Emergency savings provide immediate access to cash should such situations arise and require it. While it would be possible to access any savings account or retirement account for this purpose, such as due to market timing issues, early withdrawal penalties or the delay between selling your investment and receiving your funds, this would likely not be desirable in this instance.
Saving up money for emergencies not only prevents this situation from unfolding, but it can give you peace of mind in case anything were to arise that requires financial support – should something unexpected occur, you will have enough of an emergency fund in case something arises which requires support financially.
+ There are no comments
Add yours