In my last article, The Debt Effect, you found out that, according to a 2017 report in MarketWatch, 19% of American households have $0 saved for emergency situations and 31% of American households have less than $500 saved for emergencies. If you fall into this category, you are probably also among the 49% of Americans that feel nervous or scared about their current financial well being.
So how do you get out of this situation and stop this feeling of nervousness and get that feeling of security back?
This is literally the first step to building wealth in real life and it truly does not take someone of great intelligence to do. The problem is, the lack of being able to do this is one of the basic reasons you are here and in this situation.
The first step to building real life wealth is to build a small emergency fund, preferably between $1,000 to $1,500. This will allow you to take care of anything that may creep up during the following steps without setting you back and will also give you that little peace of mind that you need to begin your journey to get out of debt and build wealth.
Your emergency fund should be accessible, liquid, and should not be touched if it is not an emergency. If you do experience an emergency and have to use your emergency fund, replenish this fund before doing anything else.
Now, what constitutes an emergency? This could be different for everyone, but the fact that you want to eat dinner at a restaurant, want new clothes, or want a new television are never emergencies. They are all wants. If your car completely breaks down and you need it for work, you have a medical emergency, fire, etc., use this fund.
Build this fund now and stop feeling so helpless. This will give you some confidence to begin the next step of your journey.