You've heard of an emergency fund, but do you know what it is or how to make sure you're using it to its full potential?
Personal finance advocates will tell you that establishing an emergency fund is an important step on the road to achieving financial security.
That's because having an emergency fund is an incredibly useful tool to maintain a level of debt that is manageable and aligned to your goals, even in situations that are out of your control.
If you are lucky enough to still be employed, consider increasing your emergency fund to make sure it can cover at least three months of expenses.
Because of the uncertainty during this time, having an emergency fund of 6 months to 12 months can be a goal that you're actively working towards.
While you might be distracted by the shiny advice or posts that encourage you to buy the dip in the stock market, making sure that you have a full emergency fund should be prioritized JUST AS MUCH OR MORE than investing in this uncertain time.
The purpose of an emergency fund is to have ACCESS to cash that isn't tied up in investments. If you invest the cash that you have on hand, and then the stock market continues to drop, you will be putting yourself in a sticky situation if you need to access cash.
You might find yourself in a place where you NEED to sell at a loss because you need to access cash, and that isn't a good strategy!
Sure, if you have low expenses and a low debt load, you might be in a good position to invest in the dip. BUT if that isn't the case for you, don't give up quick access to cash by investing all of your cash on hand. 🚨Everyone's situation is DIFFERENT. I'm not your financial advisor, and I have NO IDEA what your financial picture looks like. I encourage you to be the AUTHORITY of your finances and consider every piece of information you see through the lens of your own life. Never take someone else's advice without doing your own research and considering what makes sense based on your VALUE SYSTEM.
This is a tricky time. Be smart and educate yourself as much as you can before making any decisions. 🚨
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