Emergency Saving: Your Financial Shock Absorbers (Video)
Saving money seems boring, so for most of us it’s not a high priority. This is a bad idea! It’s the financial equivalent of driving a car without shock absorbers. If you’ve had the experience of riding in a car with failing shock absorbers, you know that whenever you hit a bump or a pothole it’s extremely jarring.
When you are on your financial journey with no savings, you will be painful aware of each and every problem that arises. An emergency fund puts a cushion between you and life. And we all know that life happens! You have an unexpected hospital bill, an urgent home repair, or a broken down vehicle. If you have no emergency savings to pay for the situation, you now have two problems: your original problem plus a money problem!
What if you don’t currently have an emergency fund? How do you get started? It’s very simple: start systematically putting aside at least a small amount every pay period into a savings account. It’s easy to automate this either through your employer or with your bank. Your long-term goal should be at least six months’ worth of your living expenses in your emergency savings. This way, when you hit a financial bump in the road, it won’t be quite so painful.