Saving up money is smart to do

A lot of people simply spend everything in their checking accounts every month and stop only when the money is gone. This leaves no cushion for the unforeseen, which can torpedo your ability to keep your head above water. To avoid this, create a fund to be used only in real emergencies.

From their comments, its clear that members of the Armchair Millionaire community are big believers in emergency funds. What`s it for? Your reserve fund is for the curve balls that life is bound to throw at you: a leaking roof, a blown transmission, a hot water heater gone cold. It`s also for unexpected life changes, like the loss of a job, a divorce, or a major illness.

How much should you have? The equivalent of three to six months worth of living expenses is a good guideline, but take your own situation into account when deciding. If youre part of a two-income household, you might be able to get by on the other income if you lose your job, for example. If you are self-employed and have an irregular income, you might need more to see you through the lean times.

                                 

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