Written by Jenna Trollope
Don’t get me wrong, I want you to pay down your debt. But I NEED you to have a savings account.
Sure, there are exceptions to this rule. For instance, if you are living at home rent-free you pay down those student loans as fast as possible. We are the millennial generation, and you take advantage of that situation while you can because there is no point paying interest on borrowed money. If you are living at home, that is awesome. Do your parents a favour and pick up the groceries or pay for dinner, but stay there.
But if you were to lose your job tomorrow, what position are you in? What if the check engine light goes on in your car? There is a solution to that problem. We call it a piggy bank, slush fund, or savings account and if you do not have one, do yourself a favour and open one today.
I suggest having about 6 months’ worth of your expenses in liquid savings. That does not mean buying cases of water and keeping them in storage. It means having enough money in your bank account to cover your food, rent, and any other expenses you may have for AT LEAST 6 months. If you would prefer even more in savings, I am not here to stop you.
We all need a slush fund for a rainy day, so get started on building one today. The goal is to ensure you can survive if anything happens to your primary source of income. Given the popularity of entrepreneurship and more freelance positions, it's a good practice when you cannot predict your next paycheck.
Let’s think about this concept, but let’s keep it simple. If you are just starting with a savings account, begin with a small portion of each paycheck. If you set up your account to automatically pull 10% each time, it's a start and it will build your savings account with minimal effort. Avoid it unless you need it and keep it topped up.
Many of us live paycheck to paycheck, and suddenly losing your job would be a real financial concern. So unless you have a trust fund to fall back on, please make sure you have a savings account that automatically puts part of your paycheck away. You will thank yourself later.