Before I even get into this, you need to understand that an emergency fund is a must for anyone. The reason this is so is there is no way to predict what the future will bring, and consequently, to cover unforeseen circumstances or events which could put you in financial trouble, you need to build up an emergency fund to protect yourself.

Now what is an emergency fund as to its overall purpose? While I already stated the obvious that you need financial protection, the practicals of it is your’re buying time. That’s the ultimate result of having an emergency fund put aside.

What time does is offer you the opportunity to go out and find a job if that’s what happened, or to think through what your next step should be.

If you haven’t bought time with an emergency fund, you’ve basically limited your options to moving in with your mom or dad, or to accept the first job offered to you in order to keep your current lifestyle going, or to even stay in the home or apartment you own or are renting.

No matter what you do in the financial realm or what your goals are, be sure to make an emergency fund the first step toward your financial health and ultimately to build your wealth.

If you don’t have an emergency fund build up, you’re forever paying out what should have been used to put away in savings to build for your future retirement or lifestyle choices.

The reason is there is always some type of smaller event coming up that you weren’t aware was going to happen, and these endlessly eat away at your capital if you aren’t committed to putting away to build your emergency fund as the foundation of the rest of your financial strategy.

When you come down to it, don’t delay in any way in building up your financial safety fund. This is why I always advocate paying yourself first in all your financial practices, as there will always be something available to spend on if you don’t get into that practice.

But to get into that way of life you must commit first to doing it and take the first step. That’s always the hardest thing to do. Once you begin developing these financial habits, it’s surprising how easy it is to do it, and there’s an increasing sense of accomplishment, satisfaction and ultimately – the feeling of being prepared for what life may bring your way.

Just commit to taking that first step and decide on what you will put away and at what interval to build your emergency fund. Stick with it and in not too long of a time you’ll have a solid foundation to work the rest of your financial strategy from.

Tags: emergency funds, financial management, saving strategies

This entry was posted on Tuesday, February 9th, 2010 at 7:00 am and is filed under tips. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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