Little by little you are improving the financially weak areas in your life: with an emergency fund building up you are taking away the risk of having to go into debt when an emergency expense comes up and by paying off your debts you are regaining control over your finances and reducing the amount of interest you are paying in the long run.
There is another very powerful safety net you can create for yourself: a 3 months living fund. Such a fund would have 3 months’ worth of expenses saved up in case you are without an income for a while. There can be many reasons you might find yourself without an income for an amount of time such as loss of a job, taking an upaid sabbatical to look after an elderly parent, or taking time off for yourself to name just a few.
If you have a 3 months fund set aside (which you might later decide to extend to 6 months of course), you have at least some money available for your regular expenses if you need to cover these.
At the moment you are likely still building an emergency fund and paying off debt, which are your main priorities right now, but start your living fund regardless, even with just $5 a month, which might seem like nothing but little by little you will free up more funds to add to this, such as when you’ve got your emergency fund saved together or with some tips later on during these 31 Day Challenges. In this way you at least get the ball rolling.
Once you’ve set up a new savings account for this challenge and contributed your first (even if tiny) amount, let us know in the Facebook Group or with a tweet and the #31DayChallengeToFE hashtag. If you’d like to find out more about this challenge, make sure to check out step 27: Build a 3 Months Living Fund, one of the 100 steps to Financial Independence.