|Interview: Jean Chatzky
|Page | 1 | 2 | 3 | 4 | 5 | 6 | 7 |
If you're talking about a two-income household, then I think it's OK to have a three-month cushion because if one person loses a job or is unable to work, it's not likely that it'll happen to the other person at the same time.
|Make financial goals tangible |
If you're a single person, particularly if you're a single person with dependents, I like to see closer to six months.
to getting started
What keeps people from starting an emergency fund?
People see that three to six month suggestion -- and it doesn't only come from me, it's fairly typical -- and it's such a daunting number, that they get scared to start.
||How can they work around that way of thinking?
By taking one step forward. I was having a conversation
on my radio show the other day with Chris Gardner,
who is the man who wrote "The Pursuit of Happyness"
-- Will Smith played him in the movie -- and we were
talking about taking one step at a time, putting one
foot in front of the other, and he said, "and
baby steps count." And he's absolutely right.
Small steps are inevitably going to be your first
steps, and they definitely count. Once you have put
aside $25 one week and discovered that you can live
in fact without that $25 in your spending account,
then you have the confidence to know that you can
do it again. You may even have the confidence to think,
"Well, hey, if I put aside $25 and I didn't miss
it, I'm going to try to put $50 aside and not miss
So, putting aside just a little bit each week will help.
because what happens when you see money begin to grow
in your name is that you start to feel good about
the fact that that financial stability is increasing,
and it inspires you to want to do more. There are
a lot of life experiences that work this way. If you
go on a diet, once you lose a pound or two, all of
a sudden your confidence is soaring and you can lose
the next five to seven. If you go out to try to jog
for the first time in your life, the first time that
you tackle that mile, all of a sudden you feel like
you can do three or five -- and guess what, you can.