Basics of Financial Independence: Emergency Fund

1. Set aside 6-12 months of expenses in a savings account as a rainy day fund.

• The very first thing one should do on the road to financial independence is set aside an emergency fund. And the first step in this process is finding out your average monthly expenses. This can be accomplished the easy way by using an expense tracker such as Personal Capital or by manually adding them (housing, utilities, food, etc) up using pencil and paper. Either way, this step shouldn't prove that difficult.

• The next step would be to find a savings account that offers you some return on your money since the best case scenario is that this money will never be used. Deposit Accounts is a useful website that can assist you in finding a high interest bearing personal savings account that suits your needs. Personally, I am biased towards credit unions such as Alliant Credit Union but you are free to find one that best suits your individual needs.

• So is it 6 or 12 months of expenses? Personally, I recommend having 12 months of expenses set aside just because of the peace of mind it buys. For example, with only 6 months of expenses saved the average person will start panicking after 4 months of being unemployed. This can lead to rash decisions being made. One way to have the best of both worlds is to first set aside 6 months of expenses, complete the remaining 4 steps towards financial freedom, then circle back and increase the emergency fund to 12 months of expenses.

My most prized assets

It's about time I divulge something personal. Been on this blog for almost a month now and you have no idea of what matters most to me. How could you even claim to know me or begin to make my blog a daily part of your life if I am keeping you ignorant of my most prized assets? Drum roll please:
1. My health
2. My Friends & Family
3. My education

That list, my friend, took years of introspection, countless what-if scenario walkthroughs and last but not least exhaustive end game exercises.

1. My health
Quite frankly, it is the be all and end all. Without my health I have nothing. By no means am I claiming to be in perfect health. You and I both know I could stand to lose 15lbs. But I am not referring to health in the terms of being in PERFECT health. I am referring to being in functional health, you know, free of pain, injuries, illness or disease. This is the minimum level of health that allows me to get up every day and be the best person I can be even when it doesn't necessarily translate into me being my best. Wow, putting that into words fills me with regret just thinking of all the good health days in which I wasn't even TRYING to be my best. But in any case, good health is the necessary foundation for MY greatness to truly shine. Don't get me wrong, I may flash some brilliance when I am under the weather but don't expect any greatness from me on a consistent level if I am not in good health.

2. My Friends & Family
Oh where, oh where would I be if it weren't for my Friends & Family? That list of places is comprised solely with all the desolate, destitute and desperate places you can think of in this world and the next. I am eternally grateful for the simply amazing network of Friends & Family that I possess. Outside of my health, these people are everything to me. Let me put it this way, you can place me in some dire circumstances and I am confident that if given a working phone with my address book I have a great chance of getting out. These people are that freaking AWESOME. Hell, I will even let you in on a secret. All those times you gave me credit for something clever that you thought I did, said or wrote it was actually THEM. Now, that doesn't mean you don't give me props going forward. :)

3. My education
If you think education is expensive, try ignorance.
- Derek Curtis Bok
I sometimes feel like the kid in the movie The Sixth Sense, "I see ignorant people walking around like regular people. They don't know they're ignorant." And while I do acknowledge that there is some bliss to be found in ignorance there is also an accompanying amount of grief. And don't get all up in arms thinking that I am claiming to be some genius or even a relatively smart guy. What I am claiming, loud and proud, is the ability to learn. Remember, this is the information age where new technology becomes ancient technology in the blink of an eye. What that means to me is that ignorance in this age is the inability to learn. The folks who tell you they are either too busy or too old to learn will always be and always were. I SAID IT!

My most prized assets are the top three things that I need to fight harder to strengthen and protect. It should also be noted that it is within MY power to do so.

What are your three? Are you working to strengthen and protect them? Is it within your power to do so?