Hey Reader,

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Time to check in on your finances!

Consider this your monthly reminder to update your Net Worth -- an easy way to track your financial progress. 📈

Need the Money Meeting Agenda?

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Money Fit Challenge of the Month: EMERGENCY FUND

Most people understand the obvious purpose of an emergency fund because it's right there in the name: Emergencies. (Notice it's not called the "Kitchen Renovation Fund" . . . you should be saving up for large savings goals separately -- we'll talk about that in another challenge).

And it's true. Having 3-6 months' worth of cash savings will PROTECT you from going into debt or liquidating (aka selling) investments prematurely, such as a retirement fund (which costs you a FORTUNE in lost growth and ugly penalties).

BUT! Here's why Emergency Funds are REALLY amazing . . .

They are the secret to INVESTING with CONFIDENCE!!! 📈

Long-term investing is the KEY to building long-term wealth. But it doesn't work until you actually withdraw cash from your bank account and put it into a long-term investment (which are often volatile). But few people are maxing out their tax-advantaged retirement options! Why? Because they're nervous about putting their money into a restricted asset in case something comes up. And they're right! Things *WILL* come up. That's what the emergency fund is for: allowing you to invest with more CONFIDENCE.

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MONEY FIT CHALLENGE #4: Calculate how much you need for a Full Emergency Fund

Full Emergency Fund = Monthly spending x 3-6 months

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"But that's SO much cash! And saving up for it will take SO LONG!"

I answer that question, plus I discuss how much, what type of account, inflation, etc. in THIS ARTICLE. If you read it and still have questions, feel free to shoot me a message!

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P.s. Funny story.

I wrote my article about the importance of Emergency Funds in late February 2020, posted on March 12, 2020. Back then, I spent so much energy trying to convince people that bad things happen, so PLEASE get prepared. Guess what. I don't have to convince people anymore. Check out what happened to the SEARCH VOLUME on the term "Emergency Fund" almost overnight:

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Always searching for reasons to create a spreadsheet,