Why You Need to Build an Emergency Fund. Today.
Market Meditations | March 2, 2021
Everyone faces unexpected circumstances in life. Our only certainty is uncertainty. What is critical, is not that we eliminate uncertainty (for it is inevitable) but rather that we ensure we are prepared for what comes our way. Both welcome and unwelcome.
Uncertainty is particularly prominent when it comes to high risk assets like crypto. There is no shortage of stories when it comes to liquidations. Liquidation and losses can cause substantial financial strain. At the very least, you ought to have enough set aside to cover emergencies through an Emergency Fund.
An emergency constitutes anything that affects your basic ability to live or work. A vacation to Miami does not impact your ability to live. Fixing the car you need to travel into work every day however does. But how much do you need and how do you get started❓
An emergency fund should cover 3-6 months of living expenses. To begin:
- Calculate how much money you spend on basic necessities such as rent, food and transportation.
- Consider your spending habits and calculate how much you are able to save on a monthly basis.
- Finally, start putting this money aside each month until your target is reached. ?
