Determining the ideal size of your emergency fund isn't a one-size-fits-all scenario. It usually varies depending on individual circumstances. Regardless, based on personal experiences and extensive research, I've gathered some general insights that might help navigate this crucial aspect of financial planning.
Primarily, the size of your emergency fund is influenced by various factors, including your monthly expenses, financial obligations, and stability. A common guideline suggests setting aside three to six months' worth of living expenses. This amount is set aside in order to cover essential costs such as housing, utilities, groceries, and other necessities in case of unexpected situations like job loss or medical emergencies.
Yet, it's crucial to realize that this estimate might need adjustment based on your unique situation. For individuals with unpredictable incomes or job instability, a more substantial emergency fund—possibly enough to cover six to twelve months' expenses—could offer more financial security.
Specific life circumstances, like supporting dependents or owning a home, may call for a larger financial safety net.
Ultimately, the key isn't to fixate on a precise number but rather to evaluate your situation realistically. Building an emergency fund is about establishing financial stability and peace of mind. Starting with smaller contributions and gradually increasing your savings is a proactive step toward safeguarding against unforeseen challenges that life may give.
As someone continually striving to reach their fullest potential, the aim isn't always to be in an endless state of trying to 'figure things out' or relying on family and friends when life throws a curveball. Growth and maturity often mean being self-reliant, and capable of navigating life's inconveniences without constantly needing someone else as a safety net. Because let's face it, help won’t always be readily available.
I never anticipated experiencing homelessness. I prided myself on saving money well since childhood, and maintaining steady employment was never an issue as a young adult. Yet, life has its twists and turns—sometimes beyond our control. It's like a domino effect; one setback can trigger a series of them. Suddenly, you find yourself in a hole that feels unconquerable.
Nonetheless, preparation changes the game. When you're a little bit more prepared, setbacks don't hit as hard as they did when you were reckless with time and money, falsely thinking everything was 'all good.'
I recently stumbled upon a quote that struck a chord: 'Average people have coined cliché phrases to justify human failures.' It's a sobering truth. But it's crucial to remember—those phrases aren’t meant for winners. Phrases like 'I guess my ship has sailed' or 'If it was meant for me, it would happen'— but those are conversations for another time. Let’s refocus on emergency savings.
Considering the current economic climate and the rising prices, maybe instead of only fixating on saving, it’s wise to tilt toward increasing your income as well. But earning more should go hand in hand with smart spending. It's crucial for you to understand the difference between wants and needs because, truthfully, even the CEO can be fired.
Over the next 6-12 months, consider cutting back where possible while actively seeking ways to boost your income. By the end of this period, you'll have an emergency fund alongside increased earnings. Once your emergency fund is established, you can then focus on further financial education and growth.
"What should I invest in?"
KNOWLEDGE! Knowledge is your greatest asset. Dive into books, enroll in courses, and engage in webinars, seminars, and networking events whenever possible—it's an invaluable investment.
When I committed to never experiencing homelessness again and transforming my life, I began with what I call 'Free Game University' and 'YouTube University,' which basically meant leveraging resources like Google and YouTube. If you have a question, search for it! Don’t hesitate to use keywords or incomplete sentences—just aim to learn what you don't know.
Sometimes, gaining knowledge requires an investment—either time or money. If time is limited, investing money might be necessary to acquire the needed information. On the other hand, if finances are tight, investing time becomes essential to fill those knowledge gaps or acquire necessary resources. Ultimately, the pursuit of knowledge, regardless of the method, is a powerful tool for personal growth and success.
Time is relentless. Imagine reaching 50 years old, looking back, and wondering what could've been if you invested $300 in learning something new. You will never regret self-improvement—listen to those who've been there. Our mission goes beyond ourselves; it's about influencing others and realizing our full potential. Avoid the regrets of staying small. It's time to boss up and be a blessing to others. Let's go!
"Get money, buy income"
📝🧠 Here are a few YouTube pages I like to learn from: