Do you have $1,000 saved in a your high-yield savings?
This is the starting point.
A true emergency fund in my opinion has 1-2 years worth of expenses saved in cash in a high-yield savings account separate from your checking account.
What happens if you lose your job and cannot find another one? What happens if you have a major emergency?
Earlier you should have calculated your fixed expenses. House, car, food etc.
Based on these expenses you should know roughly how much you need to spend each year to maintain your lifestyle.
I recommended 1-2 years of funds. 1 year if you want to be more aggressive. 2 years if you want to be more conservative.
This money should only be used for a true emergency. Not for frivolous spending.
Money should make you feel secure and having a fully funded emergency fund will set you for a successful future. Having this money may also allow to quit your job and find a job that you really love. Or it may be the funds needed to start a new business venture.
Be patient.
When I started my emergency fund I was able to save $1,000 relatively quickly. But saving a full salary in my bank account! That was a whole different story. But slowly over time, as I worked and found better jobs, the money slowly accumulated.
And I am still working to fully fund that account. But I know that in time I will get there as long as I stay on the path and keep working hard.
Recommended Tools
– Alliant Credit Union Savings
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