Category: Lifestyle

“Do Something Today That Your Future Self Will Thank You For”

I have noticed an influx of these lists of “things to do before you are 30” partly because people really like making cool lists and since this is my year of 30, maybe I just notice them a bit more. I also think it’s because people believe that your twenties are for making mistakes and your thirties are for learning the lessons from those mistakes. Now let’s think about this for a second, how much closer would you be to your goals if you started making better decisions today? Maybe fewer mistakes and a few more wins on the fight against debt. It’s time to do something today that our future selves will thank us for.

The other day I came across this very helpful list of 12 Personal Finance Moves to Make Before You Turn 30 by Emily Co. In honor of my year of 30, I will break down some tips from various lists in more detail as we (yes, I’m including you on this) continue on this journey toward financial freedom together.  Well, since this is my year of 30, it looks like I/we could have some work to do.

Emergency Fund vs. Savings Account

Hope for the best and plan for the worst. It’s advice that balances optimism and realism because regardless of how much someone wishes for the best, life always happens. Starting an emergency fund is the FIRST step of Dave Ramsey’s Baby Steps and one of the most comforting things to help relieve financial stress in difficult times. On a basic level, you should have a starter emergency fund of at least $1,000.00. The all-important Emergency Fund makes a second appearance on Ramsey’s Baby Steps at step three when he suggests you should now save 3-6 months in your savings. When I get to that step on my financial plan, I will take the 3-6 month timeline as a suggestion but will work toward about eight months’ worth.

In my mid twenties, I learned one of the best financial lessons that have changed the way I save money—the difference between one’s savings and an emergency fund. A savings account is an account where you save for goals that you know are coming down the pipeline, such as owning a home or saving for a wedding. Your savings account is your vessel to get you from a goal to reality. An emergency fund, on the other hand, represents things you cannot foresee, such as replacing a hot water heater, traveling for bereavement, or the loss of a job. Everyone’s financial situation is different, but a $700.00 unexpected expense could be a major financial setback for someone who lives paycheck to paycheck and has not planned for the worst.

Where Do You Keep Your Emergency Fund

Regardless of how much you have saved, you want to keep it somewhere that is safe and easily accessible. In the midst of an emergency, you don’t want to have to wait 3- business days before you can take action. Before you research where you would feel the most comfortable storing your money, I want you to remember this, this is one account you are NOT trying to make money from. It sounds strange since increasing income is a great goal, but accounts with higher returns are often ones that are not very liquid. Consider a Money Market or a savings account (unattached to your personal savings) with check writing privileges and limits on withdrawals.

What Is Something You Could Do Today that Your Future Self Will Thank You For?

          

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