Baby Step 3: 3 to 6 months of expenses in savings

Congrats! Now that you’ve completed the first two Baby Steps, you have momentum! But wait… don’t start throwing all your “extra” money into investments quite yet.

It’s time to build up your full emergency fund.

Ask yourself, “Self, what would it take for you to live for 3 to 6 months if you lost your income?” Your answer to that question is how much you should save.

An emergency is something you had no way of knowing it was coming, something that has a major impact on you and your family if you don’t cover it. A great place to keep this money is in a money market account.

Remember, this stash of money is NOT an investment; it is insurance you’re paying to yourself, a buffer between you and life.

Take Action!

• Organize yard sales – sell everything but the kids!
• Pick up overtime hours at work
• Get a second job (pizza delivery is great!)
  

Resources:

• The Total Money Makeover
• The secret to saving money
• Dave's Endorsed Local Providers
• What are money market accounts?