There are a number of ways that derail the best of intentions. Many find themselves on track with their savings and investments and well on their way to financial independence, then something happens. It might be something as simple as your “wants” getting in front of your “needs.” One of your “needs” is to provide for your future. It may be a major health problem that sucks up your savings and investments. It is important to do preventive maintenance in this area. Be sure to have adequate health insurance at all times. Don’t ever be without it. You also need disability insurance coverage.

Other possibilities that might drain your savings are short-term emergencies. Financial emergencies happen in life. You will never be able to predict just when it will happen, how it will happen or where it will happen. But it is a fact of life that it will happen. Without an emergency fund set aside, you are unprepared, and it can be costly and worrisome.

These needs might be new tires for your vehicle, a shortfall in seasonal income, an unexpected house repair – the list could go on forever. Many people face these inconvenient expenses by raiding their savings or retirement funds.

Though cash flow challenges are sure to surface, the answer is not to dip into savings or investments. The answer is to have a separate savings account that is pre-designated for such emergencies. Even before saving for your retirement or preparing for investments, it is of utmost importance to set aside an emergency fund. Though ultimately you will want to have three to six months income set aside in this fund, beginning with at least $500-$1000 will get you started. Depending on your education, experience, job skills, time on the job, etc., you will eventually need up to six months of income saved. Of course, if you are paid on commission or are self-employed, six months might be a minimum to set aside in an emergency fund.

Tell me “your” story of saving for your future! Your comments appreciated!

Content © Rich Brott, 2011

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