Everyone should have an Emergency Account, which is different from your savings account. Used for a house, new car, vacation, etc.
Your emergency account is supposed to be established for situations like, if you lose your job tomorrow, how long will you be able to comfortably live before you are in need of a job/income?
The majority of our people in the urban communities can’t survive more than two months because they don’t have the proper emergency set up.
Your emergency account should be AT LEAST 6 months worth of your household expenses (rent, utilities, other bills) once you reach that point, it is your choice continue to build that for emergencies and/or add to your new or already established investment account.
How to get there: Set up a bank account completely separate from your general bank account (Checking is preferred because in case of an emergency, you have easy access to it). Set your direct deposit to where 10% is going straight to your emergency account.
With that 90% left, 33% (1/3) of that remaining 90% should be your limit to how much you can afford for your household expenses. Then once you take care of your priorities, you can add to your savings account and if you have money left over for entertainment + extras, then do that.
Think of this concept:
If I were to give you 10 eggs every day and told you to only use 9/day, what happens? Each day you will slowing earn one more egg and in a years time, you’ll have a ton of eggs.
You will get to a point where your emergency account (10th egg) will be quite fulfilling. At this point you want to treat the extra funds as if it was like your child (hear me out).
In order for your child to grow, you must feed and take care of them. The same thing is like your 10%. You continue to feed into it and watch it grow. When your child becomes an adult (your money is sufficient and you can live off of your account for the desired months), it’s time for your child to have children (investments) this is when your investments begin to make more money for you. And you continue to build more and more off of your investments.
Whole time, you still have your 90% that you are living off up. That 10% is the key to your success. But you have to be patient and dedicated to making it happen.
Books that helped me thus far:
• The Millionaire Next Door
• The Richest Man in Babylon (Highly Recommend; Short Read)
• Work Just Gets in the Way of Making Money
• Credit is King (Highly Recommend; Very Short Read)
• Rich Dad, Poor Dad
text received via iMessage 9/6/19 10:42pm