Hello NeedMoney readers,
I’d like to share a bit of advice which I wished I would have followed many years ago. Many of us — especially during these difficult economic times — are living paycheck to paycheck. I was once there myself. The problem with this is that if an unexpected emergency should arise — or if you should temporarily lose your income — then you are in a very difficult situation. In my case, it led to taking out loans at exorbitant interest rates — and subsequently getting behind on those loans thus damaging my credit for many years. I could have saved myself from this damage had I only managed to secure a small emergency fund enough to cover 90 days of personal living expenses.
Although it may seem difficult for many of you to find the extra money each month to start building this emergency fund, the effort is well worth it. Unemployment rates continue to rise, and no one is immune from a sudden lay off. Don’t end up like I did having limited options should your income be suspended — or additional unforeseen expenses arise. Most financial experts recommend having a minimum of 90 days worth of expenses set aside in this emergency fund, and some even advise having up to six months to be safe. At a bare minimum, take whatever steps necessary to build up a rainy day fund of at least 90 days. There is no harm in doing this — if it is not needed the only result is that you have extra savings towards your retirement.