Each and every one of us lacks the ability to predict the future. Tomorrow, we might head into work only to find out we no longer have a job. We could wake up to find that the water heater has exploded and our basement is flooded with water. Because of this uncertainty, it is extremely important that we are prepared to take on the financial burden of an emergency.
The very first thing to be done after paying off debt is to establish some type of emergency fund. You could have as little as $1,000, which would help cover the broken water heater or an emergency car repair. You could also boost this fund up to as much as six or 12 months worth of living expenses. This would give your family security in case someone were to lose their job.
Make sure your emergency fund is easily accessible, as you never know when you may need it right away. I like to keep mine in an online savings account at ING Direct. While you are not going to be able to earn as much of a return on your money compared to other investments, you will still earn more than if you hid it under the mattress.
To help you get your emergency fund started I have joined a few other bloggers and we are giving away a $100 in cash (or Amazon gift card) to one lucky winner.
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