JUNE: Start building your emergency fund

Start building your emergency fund

It’s always a good idea to have money in an emergency fund -- ideally, enough to cover at least six to nine months of living expenses. While you clearly cannot be expected to build a full emergency fund in a single month, you can aim to make a substantial deposit this month by cutting back on other expenses temporarily.

It turns out that having just $2,500 socked away can mean the difference between muddling through a crisis or falling off a cliff. That's based on research from the University of Colorado Boulder and Universidad Diego Portales in Chile. To get to that level, direct your bank to move a regular amount to a savings account every month. Do so even if you have credit card debt. And keep some of your money at home, in both large and small bills. Who hasn't needed cash to pay or tip people who are delivering meals or helping out in other ways? Getting rid of debt is very important, but don’t do it in spite of your savings goals. Compounding interest needs to work for your benefit as well.

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