Step 2: Build a Safety Net
Stuff happens when you least expect it. Here’s how to put protection in place so a minor expense doesn’t become a major debt headache.
Watch the video for Step 2, then learn how to build a safety net of your own.
The Keys to Success
- Build a safety net of $1,000 to pay for emergencies. Build it ASAP.
- Understand that a fully-funded emergency fund is typically three to six months of living expenses, but when getting out of debt, $1,000 is enough to cover many financial setbacks.
Do not borrow to build this cushion.
Tip from Steve Georgoulakis, CFP®
It might feel counterintuitive, but having a small emergency fund can be a huge help when trying to get out of debt. Even if it’s $1,000 in the bank to pay for an emergency, that cash will give you some breathing room to stay on your debt diet.
If you don’t already have one, it’s time to get your emergency fund started!
Come up with a plan to get at least $1,000 in a savings account as quickly as possible. Think about what you have available or what you can do to bring in extra money right now.
Tips for Building a Emergency Fund
Get tips on building an emergency fund or check out our learning guide for step-by-step support.
Read “Everyone Needs an Emergency Fund”
Go to the Save for Emergencies Learning Guide