Cash Is KingYou Need An Emergency Cash Stash!You've heard it said that cash is king. In my opinion, it's also queen, duke, duchess, prince and princess. I cannot overstate the importance of having enough money in the bank. Whenever one of my relatives asks me for investment advice, this is what I tell them: "Put your money in the bank." They don't like this. This is not what they want to hear. They soon loose interest in talking to me about investments. It's not exotic. It's not sexy. But the most important thing you can do to safeguard your financial future is build and keep an emergency cash stash.
How Much Money Do I Need To Fund My Emergency Cash Stash?As much as you can stuff into it. I know you think I'm exaggerating, but I mean this literally. You can never have too much money in the bank because you never know what kind of curve ball life (or the economy)is going to throw at you. Your goal is to establish an ever-growing cash savings account. This advice is not only for the self-employed--though it is more important for you to keep a supply of ready cash--but for W-2 employees too. Don't let those steady paychecks lull you into a false sense of security. Income is not the foundation that financial security is built upon. Savings is. Any source of income can SUDDENLY disappear. How long would it take your boss to hand you a pink slip? How long would it take for your business to dry up in a recession? How long could you stay afloat if either of these things happened? Depends on how much money you've got in the bank, doesn't it?
The Importance of CashStill not convinced. Still think investments can pinch hit for savings. That's what a lot of people thought prior to 2008, myself included. We didn't need that much liquid cash. After all, we had lots of home equity. We had fat portfolios. Then the housing market tanked, dragging the stock market down in its wake. My home equity went bye, bye in a hurry. My portfolio went on a crash diet. And suddenly all I was left with was--you guessed it--my emergency cash. A stash which looked more than adequate to me in 2007 seemed downright paltry by the end of 2008. And then my husband had to leave his job for medical reasons. He could not collect unemployment. Where we live, you can only collect if you are laid off. We had no income. At all. It took four months for him to find another job. All of my income, at the time, came from trading. Volatility was through the roof. The stock market was untradable. Our savings kept us in our home. Our cash kept us fed. This is why I believe cash is king and that ready cash is more important than either income or investments. Income and investments are subject to change. Liquid cash stashed in safe, insured accounts is not. It's OK to have other investments. I do and probably always will. But, for me, cash is king.
How To Grow Your Emergency Savings Account There are two ways to do this...
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