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Solopreneur Money

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Back to Basics #6 – Emergency Savings, Ep # 146

Do you have enough money set aside for an emergency? Your emergency savings is your ticket to freedom. Having enough money in savings gives you the freedom to run your business the way you want and to live your life the way you want.

In this episode of Solopreneur Money, you’ll learn why you need an emergency fund, how much you need, and where you should put it. If you are looking to live life on your own terms, you won’t want to miss out on this important step in the financial process.

You will want to hear this episode if you are interested in…

  • How an emergency fund makes life easier [2:22]
  • How much you should have [3:14]
  • What you should do with your savings [5:10]
  • Your action item [10:22]

Why you need an emergency fund

When you have an adequate amount of emergency savings in place everything seems to be a little bit easier. Your psyche, your mental health and wealth, your business, your well-being, and your life can all relax just a bit.

If you have ever had to wait for a client’s payment to pay your own bills you understand how vital having an emergency savings is to your financial life.

In addition to being able to breathe easier, robust emergency savings can make it easier for you to say no to future clients that you can foresee having problems with or even firing a current client.

How much should you have set aside?

I recommend having 6-12 months of expenses saved in an easily accessible account.

Many people feel the desire to invest their money. When interest rates were extremely low, I cautioned against investing their emergency funds. Now that interest rates have been climbing, it makes sense to find a safe, risk-free, interest-bearing account to hold your savings.

However, it is important to keep these funds liquid. Holding all or some of your emergency funds in a money market account can ensure that you get a small interest rate. Wherever you choose to stash your cash, the key is to make sure you can access it readily.

Take action

After you you exceed the ceiling of your savings you can begin to build your great life, so now it’s time to take action.

Check your savings balance and compare it to your basement and ceiling. How much do you need to begin to set aside to strengthen your savings to get it where it needs to be so that you can get on and live the life you want?

Listen in to hear the intricacies of getting your emergency savings started so that you can live your best life.

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