Building your Emergency and Freedom Funds
Let’s discuss the importance of building an emergency fund.
Why is it so important, you ask? Because true freedom is not complete without it. Your monthly income may cover your monthly expenses, but what if something goes wrong?
Having an emergency account acts as a buffer against unexpected expenses. This means you’ll be less likely to borrow money and lose your newfound freedom when you run into unforeseen financial stresses.
Here are a couple key points to remember about emergency funds:
1. Your emergency fund shouldn’t be part of your main checking account – You do not want the money in the account to be too easy to withdraw on impulse.
2. Your emergency fund should also not be part of your current savings account (if you have one) – The fund is for absolute emergencies, not for events you can plan for.
Building your Emergency Fund
Your first step is to decide how much to set aside for dealing with emergency expenses.
Your new account should be large enough that you don’t need to rely on a credit card or borrow money to cover small unexpected emergency expenses.
My suggestion is to put aside enough to get you out of a small-ish emergency such as an unplanned medical charge, a car accident deductible, or another unexpected bill. In my case, the number is $1500 but yours might be different depending on your unique situation.
Once you pick your number, you need to decide how you’re going to build the account balance. You can start out small and gradually up your deposit each month, or alternatively build it as soon as possible.
Whatever you decide, make the commitment to have your account fully funded by the end of the year and take your first action today by opening a new bank account dedicated solely for emergency purposes.
Your Freedom Fund
Let’s take a step further and discuss the importance of building a freedom fund.
Just as emergencies happen in life, so do opportunities. It can be easy, however, to pass them up due to lack of funds. This is where the freedom fund comes in handy.
Unlike your emergency fund which should be reserved for absolute emergencies, your freedom fund should be conserved for events that are directly related to the creation or experience of freedom.
For example, you could use the fund to…
– Walk away from a job (permanently or temporarily) to pursue other aspirations
– Hire someone to get stuff off your plate
– Take that class or course that you’ve always wanted
– Reconnect with family or friends who live far away
– Buy a plane ticket to travel the world
– Launch a new product or service
– Go to a life-changing conference
– Invest in your personal development
– Relocate to somewhere you always wanted to live
Your freedom fund is your bridge to freedom. It holds your dreams, your wishes, your future.
Without a freedom fund, you wouldn’t have the flexibility to lock in opportunities as they arise and invest in your freedom.
When I started my freedom journey, my freedom fund was fairly small, only $500, but it was enough for me to buy a oneway plane ticket to Nepal, my first leg of my round the world trip.
It was a small step, but an important one – It symbolized my proud commitment to freedom.
The reason I share this with you is because I want you to start early. Putting even a small amount each month is far superior to saving nothing. Remember, it’s all about priorities so don’t delay in getting started.
Building your Freedom Fund
Your first step is to determine what your new fund can be used for and what it can’t – Put together a list of events that the freedom fund can be used for and pledge to use it responsibly.
Your second step is to decide how much to set aside for your new fund. If you’ve already got funds handy to set aside, that’s great. Otherwise, commit today to start saving.
My suggestion is to set up ongoing automatic transfers from your checking account into a separate savings account and treat it as a regular monthly utility bill…
It’s okay if you don’t have much to put aside now – just start small and build it up as you go along.
One final note before we wrap up – You will want the funds to be available at a moment’s notice so don’t lock it away long term. Keep it in a regular savings account where you’ll have easy access to your funds.
* If you’re seeking extra motivation and inspiration on your journey of personal growth, I recommend taking a look at my SMART growth goals page, This page offers thousands of goal ideas that can assist in the establishment of new aspirations and the attainment of greater heights in one’s life. In fact, it was instrumental in my creation of a list of 100 goals, which I pursued for a decade.
Chief Editor
Tal Gur is an impact-driven creator at heart. After trading his daily grind for a life of his own design, he spent a decade pursuing 100 life goals around the globe. Tal's journey and recent book, The Art of Fully Living, inspired him to found Elevate Society.
