Several financial planners would agree that one of the foremost and important steps that you should take to protect your financial stability is to set aside funds as emergency reserve. The concept that you have the fund for emergency and unexpected events is enough to help you stay away from using your credit card and drown yourself in debt.
How to Get Started
Everyone must stash a little extra cash in case of emergencies. However, how much money should you keep? Although the topic of exactly how much money is needed for your emergency fund is open to debate, the minimum amount should be enough to cover your expenses for daily living for at least three months. It is also wiser to save for six months though most financial planners agree on a full year worth of cash.
Your personal circumstances and what it takes to provide you with a peace of mind are the elements to help you determine just how cautious you want to be. If for instance, you have well-off parents who have always been supportive and willing to help you in a financial crisis, an emergency fund for three months will be sufficient. On the other hand, if you had reach for you credit card for help...