What is a safety net? We know what it means at the circus, but maybe you haven't thought about it in your financial life. The safety net is the last defense; when everything else fails, the net will stop disaster from happening.
Do you have a safety net?
As we get older, it's easier to see how many things in life can go wrong: a medical emergency not covered by insurance, a job loss, an economic downturn, a natural disaster. It's impossible to insure against everything. But life without a safety net is too risky.
If you don't have any emergency fund, can you imagine the emotional calm you would have knowing there is cash in the bank in case everything goes wrong?
But it's not like we can decide one day to put $1000 in the bank; we don't have $1000 just lying around. Some do, but most are just getting by.
So what are some steps you can take? Even if you have setbacks and false starts, if you can get back on track, you can make progress.
1. Set up an automated transfer to an account you don't touch.
2. Put cash in a jar and commit not to touch it.
3. Use a payroll deduction at work to put the money in a credit union so it never comes into your checking account.
Maybe those suggestions are simplistic, and we don't want to imply that lack of discipline is the only reason people struggle with not having an emergency fund. That is not the case at all. But for most people, if the money is not in the checking account, it's easier to be creative and find a way.
Depending on your situation, there may be other solutions. But automation and segregation of accounts seem to be the most viable solutions for most people.
If you have some success with $100 or $500 of $1000, then life can change. If you have $1000 in the bank and know you can leave it there without spending it - that is life changing.
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Disclaimer: The views expressed on this website reflect the personal opinions and experiences of the writer. Nothing in this article constitutes financial advice in any way. Information on this website should not be relied upon for investment or business advice. Please consult with a qualified financial professional before making any financial decisions. 3800221