When times are GOOD, it’s hard to imagine having to deal with an out-of-nowhere medical emergency or a job layoff. But things happen, and it pays to be prepared for that wedding in the family or even your friend's house warming party.
“When I was younger, I used to think that if I didn’t have a specific goal to save for, I didn’t have to save [at all]. Now, in my line of work helping people prepare for retirement, part of the challenge I see is that most people have debt but they have little or no savings in the bank. Most people don’t /can't save enough—they might use a credit card for a flat tire. They don’t save for the loss of a job or a disability.” Having that rainy day fund can keep you from racking up debt.
The threat of debt is a great tool to start INVESTING.
How CAN YOU Do It: If you’ve never funneled savings into a dedicated emergency fund, you’ll want to start by stashing away at least one month’s take-home pay before accelerating any other financial goals. Once you’ve reached that benchmark, continue to save up to THREE, SIX, NINE AND THEN IDEALLY ONE YEARS WORTH OF PAY depending on your situation.