I hope that all of you reading this article has an emergency fund. We have all heard the saying, “Money talks”. Some will add something like, “all mine says is Good-bye”. I can totally relate to that myself. But before the final good bye, there are lessons to be learned and if you listen closely, money will tell you some things.
Many money gurus will tell you that you need an emergency fund. This is a special untouchable, unspendable portion of money set aside at a special location so that when you have an emergency, a true emergency, you can just pay if off using the money you already have. The total amount of your emergency fund may be different for different people and situations. Personally I believe that it should be at the very minimum $1000.00. Some financial minds will highly suggest a total of 6-8 months of your current salary set aside in case you lose your job. Regardless of how much, I must totally and whole heartily agree that a rainy day savings fund is necessary for financial survival.Here are some lesions that I learned from my e-fund.
1. I am very necessary to avoid credit card debt.
If you are serious about getting out of debt and destroying those credit cards once and for all, start saving. Therefore when there are real issues, you have the money. Your savings is your money and it is real money. You are not using your good credit which is just another way of getting and keeping you in debt.
2. Emergency Fund Says “Hide Me!”
Unless you are very disciplined, your special saving fund needs to be in a rather secret place. Now you could bury it in your back yard, under your mattress, or floor boards, etc. However I do suggest opening an account in a separate bank and having the card for that bank in a separate place, not in your wallet or close to your computer if you shop online.
3. Feed Me Regularly
No matter how much you have in savings, budget some money every month or even every week to go into your emergency fund. If your goal is $1000.00 and you have that, make sure that a month does not go by without you making some sort of deposit. Obviously the more financial cushion you have the better you will be.
4. Fertilize me too!
Make your money work for you. Passive income no matter how small is still income. Once you have at least $1000.00 set aside for only emergencies, then do some shopping to find a high interest rate so that your money will grow at bit on its own. I used to work for a man who said that the trick to growing a money tree is to “fertilize it well”.
These are some of the financial tips I learned before my money left me. Parting with my money was not as hard when there was more of it. What have you learned from your money? I would love to know.