This piece is part of my 2016–2026 archive migration. Some original formatting, content, and external links may be missing, changed, or not be optimized.
The dangerous price of living in the moment
A credit card is the closest thing many people have to resemble an emergency fund.
Why don’t most people have an emergency fund is a similar question to why don’t people eat healthier, which will likely mitigate future health issues.
It’s easier not to eat healthily and enjoy short-term satisfaction. Thinking ahead, planning, and sacrificing now isn’t fun.
Living in the moment is always easier than living in the far future.
It’s easy to stay unprepared, especially with a steady paycheck. As long as your paychecks are coming in, there seems to be nothing to worry about.
But we all know that when a job loss happens, things can quickly take a turn if you don’t have any savings.
You can get by until you can’t.
Most people are hoping nothing inconvenient ever happens to them.
But hoping is not a prudent financial strategy.
At some point during your lifetime, you will need an emergency fund. Things pop up, not necessarily bad or good things, but financial resources will be needed.
A credit card can save you, but it frequently leads to debt.
What Are You Willing To Give Up?
Creating an emergency fund will require sacrifice for most people.
I wasn’t spending or prioritizing much else when building my emergency fund.
What will you have to give up to create a financial safety net?
How Much Do You Need?
It is essential first to determine how much of an emergency fund you need. Having at least 3–12 months of savings put away is recommended.
Some people have more or less.
If your job isn’t stable, maybe you want to have 12 months put away. You may only need 3–6 months if you have multiple income streams.
Where Will I Put The Money?
Where you put your emergency fund is also crucial. If you keep it easily accessible, it can increase your temptation to spend it.
It can be harder to access if you keep your money tied up in investments.
It is recommended to keep your emergency fund hard to access. If you’re not a spender, then keeping some of it liquid is okay.
How To Avoid Having Ever To Use Your Emergency Fund
If you have multiple income streams, you won’t ever need to touch your emergency fund because if you lose one stream, you have others to keep you afloat while you work on replacing that lost income stream.
The second thing you can do to help avoid dipping into your emergency fund is consistently live below your means.
Free educational resources
This content is for informational purposes only — not professional advice. Consult a qualified professional before making any major decisions.
This content is for informational purposes only — not professional advice. Consult a qualified professional before making any major decisions.