Are You Ready to Start Saving for Retirement?

​There is one BIG question you need to ask yourself before you get started!

I had a friend the other day tell me that she needs to really buckle down and get focused on saving more money for the future, such as opening up an IRA. In hindsight, that's a great idea, but I asked her one simple question. Are you ready for that, like do you have an emergency fund yet? Her answer… NOPE! 

Hold up girl… LET'S TALK!

What is an Emergency Fund?

I personally like to call this my “Oh Shit Fund”, which basically tells you exactly what this fund is for. It’s for those moments where you are royally screwed if you do not have cash NOW! I'm not talking about oh my purse broke. I'm talking about, oh shit, my car has went crplunk! Or the water heater is out. Or better yet, the A/C has gone out in the dead of Summer (Yikes!)

Why Do We Need an Emergency Fund?

“Life is like a box of chocolates” right? Meaning, you never know what is coming your way in life. As shown above, things can happen quickly and you need money to cover it. Furthermore, you do not want to put your emergency fund into an IRA or an account that you can not liquidate QUICKLY. Think about it… if you are having an emergency and you are trying to get money out of an IRA, you are waiting about 2 to 4 days for that money to come in! This is an emergency! We can not wait that long during such a critical time. Once you get your emergency fund funded, get it in some type of account that is easily accessible to you.

How Much?

Short and sweet: $1,000
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I like to follow Dave Ramsey’s advice, by having $1,000 in the fund at all times. Then build up to his next step, which is to have three to six months worth of bills in the emergency fund.

Growing the Fund

​Now for the fun part, building that fund!

When you start saving for your emergency fund, you need to budget it in like it is an expense (because if you think about it… it is an expense if you have to use it for something that was unexpected). So start out by budgeting it into the monthly bills. Another thing you can do to help build it up faster is to adjust your tax withholding. Withholding more from your paycheck each week can really add up at the end of the year, so by adjusting your taxes that are withheld is a great way to save without saving.

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Written by Skyler Barbour

Sources:
​https://www.ramseysolutions.com/saving/quick-guide-to-your-emergency-fund