1. Set aside an emergency fund
As its name implies, this fund will be used only for emergencies. Those events that happen out of the blue, taking you unaware. Some examples would be like getting into a car accident, or a wisdom tooth extraction.
Use this emergency fund to pay for such emergencies and avoid having to take on debt or borrow from relatives and friends. If this fund runs out of money, make sure it is replenished again first before making other financial decisions.
|Not having an emergency fund is like paddling against the current|
6 months is usually a good gauge of the amount of emergency fund you should have. It provides an optimal level of coverage for most emergencies while not holding up too much of your money in zero-return cash. You can adjust the amount of funds to 1 year’s worth if your salary or earnings …Read the full article →