Extra money? Give it a job!
Now that you have gotten your budget laid out, it’s time to determine what you are going to do with the money beyond your expenses. The first step is to establish an emergency fund (EF). When life happens, you need to be prepared. The size of the emergency fund will be different for everyone. Some people feel that you have to have 3-6 months expenses in an EF. Others feel that $1,000 is enough. It all depends on your comfort level. The TA and I both feel comfortable with $1,000 in our EFs. We typically can access money from other accounts or investments within a week. You just don’t want to back to living on credit! Once you have this EF set up, move on to the next step.
This step will require you to think about what your goals are. Sit down with your significant other and determine what you want your future to look like. Some questions that you should be asking each other:
- How many pots will you fill?
- This could be like setting money aside for a replacement vehicle, updating an appliance, a date night….
- How will you handle big expenses?
- Things always come up in life. If your vehicle springs a leak from your head gasket, how will you cover that cost?
It is SUPER important that you are both on the same page. If you aren’t, it will feel like you are swimming upstream. It could also create feelings of resentment. My wife and I went through a rough patch that lasted several years of not being on the same page. Fortunately, we came to an agreement on our financial future and path.
All of this savings involves money that you plan on using within the next 6-12 months. Once you have these savings goals funded, it’s time to look at the next step. Investing….
Keep Stackin!