To give yourself a financial head start in life, you have got to recognize that the concept of financial security and success is as much about mindset as it is about money. If hopefully you’ve learned anything during these past few years it’s that there will be trying times in the economy and that it’s important to be prepared. I remember when the stock market fell like 20% in March of 2020, and then when Russia invaded Ukraine and when the tech industry basically all laid off 10-20% of their people. It’s important to practice financial readiness, so let’s show you some approaches to ensure that you are able to cover as many bases as possible.

Emergency Fund Preparedness

As tough as it can seem to save for emergencies, we’ve got to understand why we should be doing this in the first place. Having enough money to cover three to six months of your living expenses in an emergency fund will be a critical safety net during any unexpected financial challenges. If you find that an attorney comes knocking on your door because of a lawsuit, you unexpectedly lose your job, or have to pay for a medical issue, these emergency savings will take the pressure off. An emergency fund should be your top priority. If you don’t have one, start today. Start by saving up $1,000 and put it in a separate bank account. Then keep working (a bit slower is ok) towards 3 then 6 months of expenses. You’ll sleep so much better at night knowing a small setback won’t totally derail you.

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Do Not Think That Credit Cards Are Free Money

One of the biggest problems we can all have is thinking that in order to get a little bit extra out of life, we should spend a little bit more beyond our means. This is where the credit card enters the scene quite fortuitously. But we end up relying on credit cards to get us out of problems that have such an impact on our lives, not just for a couple of years, but potentially decades, that it becomes tough to break free from. Avoiding high-interest loans is critical, but you should also minimize credit card debt as much as possible. There are approaches to reducing your debt that make a big difference, such as the debt snowball method, but you have to avoid the temptation of putting things on credit cards in the first place and follow the next rule. If you use a credit card, pay it off each month!

Live Within Your Means

We all think we are living within our means, and while there’s a case to be made for enjoying life, one of the best approaches to ensuring that you are building up an emergency fund while also making the most of life is the 50/30/20 method. 50% of your earnings after tax should cover all of the necessary expenses like mortgage and bills, 30% goes on the things that you want in life, and 20% goes into paying debt or into savings. Living below or within your means is very tough and it requires altering your attitudes to money, which is something that can take years to do. But when we learn to avoid unnecessary expenses or ask ourselves if we need certain things in our lives, it gives us a far better ability to not rely on money as a means to happiness, but actually as a commodity.

Invest When You Can

If you find you’ve got a dollar or two leftover at the end of the month, can you invest it? Lots of investment advice talks about the best approach to starting investing by saving up a few hundred, but if you can’t afford that, start smaller! ETF Index funds will let you invest with a smaller amount of money and even if your money sits in a brokerage account waiting until you have enough to buy a share, that’s still money that’s earning interest and that’s set aside for investments!

Whether it’s ensuring you know how to use your money or avoiding lawsuits, you need to understand the best ways to give yourself that all-important headstart!

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