Financial preparedness is crucial for dealing with unexpected expenses, as life has a way of throwing us curve balls when we least expect it.
Recently, my son Jack had to undergo emergency surgery for two cavities, which cost a lot more than we anticipated. However, thanks to our emergency fund, we were able to cover the upfront cost of $400,000 (about US$3,000) without any difficulty.
Having an emergency fund is essential, as we never know when an unexpected event will occur. It provides a financial buffer that allows us to meet large unexpected financial needs, such as medical emergencies or unforeseen expenses, without having to rely on credit cards or loans. Experts suggest having enough savings to cover at least three to six months’ worth of living expenses.
While investing is an excellent way to build wealth, it’s crucial to not tie up all your money in investments.
A high-yield savings account is an excellent option for building your emergency fund, as it allows for fast access to your money when you need it. I strongly advise against investing your emergency fund, as it’s essential to be financially prepared for unforeseen circumstances.
It is possible to have money to live, save, and invest, but it’s crucial to have enough income to support these goals.
If your current income doesn’t stretch far enough, it may be time to consider increasing your streams of income.
Don’t get caught off guard by life’s surprises; stay financially prepared so you don’t have to scramble when an emergency arises.
Keisha Bailey is an experienced investment strategist who teaches people how to earn passive income, create wealth, reclaim time and reach financial freedom by investing. She works with investors to create highly profitable portfolios so that they can build wealth faster. If you are looking to learn how to level up your money, she can be reached at [email protected].
