This post is about financial freedom and setting up an emergency fund. I think these are two things that are very important in personal finance. I chose to talk about these together because I feel they both should go hand and hand. I will first talk about what financial freedom is to me. If you ask 10 financial people what financial freedom is, you will likely get a different answer from all of them. To me financial freedom is not about being a millionaire and being able to buy whatever you want. It is about not living paycheck to paycheck and having your budget under control. It basically means living within your means of what your income provides. Many people get into financial issues because they live outside of their means. Financial freedom is also about paying off your debt so you can have money left over each month to save and have financial goals. One of those goals should be to setup an emergency fund.
An emergency fund is an account you setup for emergencies. An emergency is not your television breaking or the need for a vacation. An emergency is loss of employment, medical issues, etc. I recommend saving 2-3 months of living expenses in an account only to be used for emergencies. This amount can be $5,000 or even $10,000. It all depends on your living arrangements and lifestyle. This may sound like a lot, but creating a budget will tell you how much you need to live on if something catastrophic were to happen. Once you have reached financial freedom make sure to setup an emergency fund to protect your family.
Thanks for stopping by today. I hope you have a great 4th of July and be safe!!