One of the most important financial planning moves you can make is to build an emergency cash stash. You need to have access to ready cash in case your income takes a hit or something catastrophic happens. The rule of thumb is to have at least three months’ worth of income saved as emergency cash. If there is only one wage earner in the family, six months of savings is probably necessary. This can seem overwhelming at first since few people can toss thousands of dollars into an emergency stash. But the idea is to build up to it by building your emergency cash stash a little at a time. Tax return time is can be a great base for many people. Commit your tax return (or at least part of it) to an emergency cash stash. Even if you find that you only have $100 to spare, use it to open a money market account or an online savings account with a higher yield. Either way, you are starting something and you will earn a yield that will add extra money in your account. Next, honestly figure your budget. Can you cut out a few things each month? Are you being sucked into buying things you don’t need? More than likely, you have at least $50 to set aside each month. Make it a point to put that money into your cash account every month. While the build-up may be slow, the idea is to get into the habit of saving. Even when you hit your goal, keep putting money into your emergency cash account. It never hurts to have more than you need. A good habit of continually setting some of your money aside will carry over for the rest of your life. And when you make it a priority, you will find that other things (like another trip to the movies) are not as necessary. Plus, every so often you can take a portion of the extra money and invest it in a money market mutual fund or other investment.
Don’t forget the 72-hour emergency cash stash
While the emergency cash for long-term living expenses should be kept in some sort of an account (make sure you keep good records and keep them in a safe place), you also need to have “real” cash. As in the cold, hard kind (or, rather, the soft, papery kind). Your 72-hour emergency kit should include a fireproof box (you can buy them at many stores) with important records and actual cash. Your best bet is to limit the $100 and $50 bills and instead save $20 bills. In an emergency situation, you don’t want to be stuck with large bills since some places may not accept them. Preparing for the unexpected is an important part of financial planning. You want to know that you will be able to “get through” a tough spot and if you start now, you are more likely to experience success. For more information on building an emergency cash stash, visit this article on Bankrate.com. Also, CNN Money offers an interesting look at overcoming money hassles. emergency cash, personal finance, financial planning, finances, financial goals, cash stash, <a href=”http://technorati.com/tag/money market” rel=” tag?>money market