Several financial planners would agree that one of theforemost and important steps that you should take toprotect your financial stability is to set aside fundsas emergency reserve.
The concept that you have the fund for emergency and unexpected events is enough to help you stay away from using your credit card and drown yourself in debt.
Everyone must stash a little extra cash in case ofemergencies. However, how much money should you keep?
Although the topic of exactly how much money is neededfor your emergency fund is open to debate, the minimumamount should be enough to cover your expenses fordaily living for at least three months. It is alsowiser to save for six months though most financialplanners agree on a full year worth of cash.
Your personal circumstances and what it takes toprovide you with a peace of mind are the elements tohelp you determine just how cautious you want to be.
If for instance, you have well-off family members who havealways been supportive and willing to help you in afinancial crisis, an emergency fund for three monthswill be sufficient.
On the other hand, if you had to reach for your credit card for help, you will end up paying a large amount in interest on the debt, you would be better off saving enough money for your expenses that would last for at least six months.
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