Photo courtesy of www.millionaireacts.com
Regardless of financial status, all people who are capable of earning should make it a point to have an emergency fund. In fact, financial advisers recommend that people should have at least six months-worth of expenses saved for.
Having an emergency fund is no doubt one of the best decisions a person can make in his entire life. Having that fund might cost him some of his really coveted luxuries, but what he gets instead is a better and more stable financial state in the future.
An average person would spend about 70% of his income on food, transportation and housing. The rest of his income will then be up to him, if he would end up spending it all or if he would choose to set it for his emergency fund. Saving at least 20% of his income will get him a long way to becoming worry-free financially. It might even be possible for him to save as much as a million dollars if he really put his heart and mind to it.
One good piece of advice about an emergency fund is to treat it like a regular bill, one that reoccurs. In that way, just like any of your other bills, you will feel the obligation to set aside a fixed amount every month just for your emergency fund. With this kind of financial discipline, you will not have to worry about having enough money in case accidents, disasters, or other emergencies happen. Basically, you will reap a great reward for what you have sown today and that will also give you a sense of accomplishment.