Money set aside.
WHY IT MATTERS MORE THAN ANYTHING ELSE
Without savings, every unexpected expense becomes debt.
WHAT TO BUILD FIRST
An emergency fund.
WHAT IT IS FOR
Unexpected necessary expenses: medical, urgent repairs, loss of income.
WHAT IT IS NOT FOR
Planned purchases Opportunities Anything that can wait
HOW MUCH
Enough to cover essential costs for a period without income.
WHAT PERIOD
Longer for irregular income, shorter for stable employment.
WHERE TO KEEP IT
Somewhere accessible but not too convenient.
WHY
Money in an account you use daily is spent.
WHAT TO ESTABLISH
A separate account.
HOW TO BUILD IT
A fixed amount from every payment received, before anything else.
WHY BEFORE
What is left after spending is nothing.
WHAT TO AUTOMATE
The transfer, where possible.
WHY
It removes the decision.
WHAT TO DO IF THE AMOUNT SEEMS TOO SMALL TO MATTER
Start anyway.
WHY
The habit is what produces the fund, not the initial amount.
WHAT TO SAVE FOR AFTER THE EMERGENCY FUND
Specific goals, named.
WHY NAMED
Unnamed savings are spent; savings with a purpose are protected.
WHAT TO ESTABLISH FOR EACH
The amount, the date, and the monthly contribution required.
WHAT TO AVOID
Keeping savings where they are easily spent Lending savings you cannot afford to lose Keeping large amounts in cash
WHY CASH
It is lost, stolen and eroded.
