Section 2: Building Your Financial Foundation
It’s not a matter of IF setbacks will happen, but WHEN.
Your First Financial Safety Net
Before investing, paying off debt, or even thinking about reaching your financial goals, you need one thing first: quick access to cash when needed. This is what will keep your financial wealth strong and resilient, so it doesn't crumble when the inevitable happens.
This money can be in
Small stash of cash secured in a safe location that you can quickly access.
A checkbook cushion you never dip below. A checkbook cushion will protect against accidental overdrafts and can help catch life’s little surprises before they throw your entire plan off track.
A savings account you can access instantly (such as a bank that is close enough to walk into if needed, or that has an ATM close enough to access quickly if needed.
Here are a few examples suggested:
$1,000 – $2,000
Enough to cover your most expensive deductible
1 month’s worth of expenses
Note: Prioritize other investments before considering precious metals or other non-cash assets to add to your cash emergency fund. Refer to the Investing Hierarchy Chart in Section 3 – Wealth Building.
Remember, it’s all about finding your S.W.A.N. number. (See previous lesson for directions on finding your S.W.A.N. number.)
Choose or find the amount that is best for you.
This is about building breathing room—the kind that keeps you calm, confident, and in control no matter what life tosses your way.
Use the worksheet attached below to document your Cash Emergency Fund goals (based on your S.W.A.N. number) and your current saved amount for future reference. Attach it to your Annual Financial Checkup workbook for future reference.
Downloadable Worksheets
CASH EMERGENCY FUND Worksheet
This worksheet is also included in the Annual Financial Checkup Section 2 bundle.
Section 2 Annual Financial Checkup bundle.
This bundle includes all the worksheets for Section 2, including the CASH EMERGENCY FUND worksheet, in a single, easy-to-use PDF download.