Saving For The Rainy Days
A long time ago, I learned something from my financial advisor that I need to put aside 3 – 6 months of living expenses in an easily accessible account, preferable a cash account which I can withdraw money during emergency. According to quite a few experts, this is a more important fiancial step than preparing for the retirement.
I am glad I listened. Although my emergency cash once went into the house I bought, I managed to restock it in the last a couple of years. Now, I am looking at this cash account, and I am so thankful that I didn’t ditch this idea during my good years. The money absolutely gives me the options to do what is best for me right now. I can fearlessly negotiate with my employer. If things fall apart, I can always take a break and re-evaluate my next step without worrying about money.
I always remember this golden principle – Pay Yourself First. Each month, an auto withdraw program I set up deducts a set amount of money from my checking account to this saving account that pays guaranteed return. No stock, not even bonds this time. Cash is the king in this case.
I use ING Direct orange saving account. It currently pays 3.8% with no fees. Anyone can set it up as long as you have a checking account. I don’t personally like the bank’s saving account because the money is too easy to be spent. ING’s money can take a few days to get to your hand so it’s easy enough to get it when the job is gone, but it is not that easy to blow it when I am making impulsive buy in the shoe stores. :-)
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