Living without an emergency
fund is like sailing on a cruise ship that's not
equipped with a life boat. You experience smooth sailing
until rough waters imperil the ship -- and then you
have few options.
If you don't have an emergency fund,
it means your threshold for risk is set dangerously
high -- to a point where normal events can become
emergencies. Have you ever felt uneasy because you
weren't sure you had enough money in your checking
account to cover the checks you wrote?
What if you had a different "set
point"? What if you started to feel uncomfortable
when your reserve funds fell to $10,000? That's the
difference between living paycheck to paycheck and
having a wealth mentality.
You may believe you don't have extra savings set aside because you don't make enough money or you've had a run of bad luck. Or maybe you think you'll save after you get out of debt. It might be counterintuitive, but unless you start saving regularly, that day may never come.
Certified Financial Planner Bedda D'Angelo
of Fiduciary Solutions in Durham, N.C., uses a wealth-mentality
approach with her clients so they transition from
dependence on paychecks to independent wealth. It
all starts with emergency savings.
Follow D'Angelo's tips to facilitate
the mental adjustment you'll need to shift from lack
to abundance.
| These practical steps are unconventional in some ways, but they will help you implement a plan. |
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| 7 steps to financial security |
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1. Focus on your progress
D'Angelo's clients are often initially embarrassed
when asked about their goals because they don't see
the progress they've already made.
"When people don't have an emergency
fund, it's because they don't focus on what they own;
they focus on what they owe," says D'Angelo.
Maybe you have college loans or credit card debt,
but set that aside for now and start with what you
do have and build from there. You can't build from
debt.
D'Angelo discovered that people take
little note of their assets when they are focused
on what they don't have. "I'll ask (clients)
for paperwork and they leave out their 401(k). They
may own a lot in Florida but they don't think of it
as property. It's always a shock to them to see that
they own anything."
For this reason she asks clients to give her their 401(k) balances every month because it helps them see their progress.
What
do you have?
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