September 15th, 2020
How to protect yourself … Even against the unknown.
Life comes at you fast and so do the expenses.
Fortunately, most are foreseen, but the expenses that are unforeseen obviously cause the most issues.
Preparing for them is key to handling these expenses appropriately (paying for them that month) and not inappropriately (running up a credit card balance).
Like we've talked about, credit card debt is one of the fastest ways to fall behind and accrues interest at one of the highest rates. However, it is one of the easiest solutions to pay for these expenses so most people take this route. We’ll help you find the best route.
From expenses such as new car tires to a destination wedding to a hospital trip, an emergency fund will help cover some if not all of the expense.
The general rule of thumb is 6 months of your fixed expenses is the right about of money to keep for emergencies.
However, for most millennials, 6 months of fixed expenses can be a significant chunk of change so where you keep this money is important. Since this money may not ever be used, it is worth keeping in a liquid investment such as a low-cost, no load charge mutual fund with a more conservative investment allocation. What this does is still allow you the opportunity to invest this money (potentially accrue interest), but in a place that is very accessible. Buying into a large fund with high volume increases your ability to cash out and quickly to cover any emergencies.