Have you met my friend Murphy yet? When things could go wrong, he always seems to show up — and here’s my best advice to plan for his arrival.
In today’s episode of Your Money Minute with Tracy Stewart, CPA, I want to talk about building an emergency savings fund after your divorce. Surprises happen from time to time. Some are welcomed, and others aren’t. Some are exciting, while others are just downright expensive. Be prepared, because you will find yourself on the receiving end of a surprise when Murphy is involved.
Building an emergency fund is straightforward: You want to plan for six months of take-home income by slipping away as much money as possible each month. The hardest thing about a post-divorce emergency fund is correctly defining an “emergency” when everything around you is changing.
An “emergency” is something you can’t plan for. A new car to replace the old, worn out vehicle you’ve been driving is not an emergency… You should already be saving in another account for this expense. Vacations… are not emergencies! (No matter how desperately you just need to get away…)
Start funding your emergency fund as soon as you can. Things happen, and the quickest way to ensure your long-term financial stability is to be prepared when they do.
Financial independence is unbelievably liberating. Don’t get caught without a plan: Start building an emergency fund to help build and keep your wealth, even when Murphy and his little surprises come knocking at your door.
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