Yet Another Safety Fund Article
Do you remember my post detailing how you can be financially prepared for emergencies?
If not, then head on over and click here so you can read it now.
If you really read the whole article then you might remember how I told you to multiply your average monthly expenses to around 6 to 8 so you can arrive at the amount which you should save for your safety fund.
Now, I have a new formula for computing the amount you need to save for your safety fund!
But before that, I’d like to tell you how I came across that new formula that I’m going to disclose to you in a short while.
The Awesome Group for Like Minded Individuals
If you have been reading the articles here for quite some time now, you may have realized that I am part of a very exciting club called the Truly Rich Club.
One of the newest benefits of being a member of this club is having access to what we call the Social Site.
This means that all the like-minded members, from aspiring newbies to successful entrepreneurs, are all gathered there to interact and help everyone out whenever we have questions about personal finance, investing, business and entrepreneurship.
So, as I was browsing one of the conversations of my fellow club members, I came across their topic regarding how to save up their safety funds.
Reading their conversations lead me to one of the suggestions regarding how to compute the amount needed to be saved for our safety funds.
The New Safety Fund Formula
The formula, instead of using your average monthly expenses, uses your net monthly income.
In effect, it would be something like multiplying 6 or 7 or 8 to your net monthly income.
Remember, the net monthly income here is the income after taxes have been deducted.
The rationale behind this awesome formula is when the thing hits the fan and let’s say you lost your high-paying job, you will still be able to recover for at least 6 months as if you were still getting income from the job you just lost.
Awesome, right? Does it make sense?
How about you? Have you saved up for your safety funds yet?
What formula do you prefer? The one with the monthly expenses? Or the one using your net monthly income?
Let me know by commenting below!
To our success in all areas of life,
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