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Hi Everyone,

If there's anything you can count on, it's that life is filled with unexpected changes. Stuff happens.

Let's face it. No matter how well you plan or how positively you think, there are always things out of your control that can go wrong -- sometimes really wrong. People lose their jobs, their health, their spouses. The economy can go sour, the stock market can drop, and businesses can go bankrupt. Circumstances change.

Some people worry about change, others prepare for it.

As part of my FinishRich community, you should prepare. That way, when you hit a financial snag, you don't have to borrow against your future--that is, ransack your retirement account or max out your credit cards--to deal with the problem.

Today, I want to reemphasize how important it is to build an emergency account and give you my 6 rules of emergency money.

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  1. KEEP YOUR EMERGENCY ACCOUNT SEPARATE FROM OTHER ACCOUNTS. This means you want to put your emergency cash cushion of at least three months of expenses into an account that is NOT your regular checking account, but one set up specifically for this purpose. Once you set an account up I suggest you make your emergency fund automatic. That means every single time your paycheck is deposited, your checking account is set up to automatically sweep money into a separate savings account you've set up for your rainy-day fund. I suggest you start by moving 5% of each paycheck to your emergency account until you reach the goal you set for yourself.

  2. DO NOT HAVE A CHECKING ACCOUNT OR ATM CARD ATTACHED TO THIS ACCOUNT. Why do I say this? If you don't have an ATM card or a checking account attached to your money you will be more likely to leave the money alone, so you actually use it for what it's meant for--an emergency. What's a real emergency? It's not just having to buy a new dress for that special party. Or finding an amazing set of wheels for your car at a once-in-a-lifetime price. A real emergency is something that threatens your survival, not just your desire to be comfortable. So unless your family is about to go hungry or be thrown out into the street, you shouldn't be dipping into your emergency fund.

  3. SET UP SEPARATE ACCOUNTS FOR OTHER INVESTMENTS. If you are trying to save for a large purchase like a car or household appliances make sure you save for these in separate accounts, not your rainy-day fund.
To get my last three emergency money rules, click HERE.

If you don't have an emergency fund set up yet, I urge you to set one up today. Remember, no amount is too small to get started--even $25 every payday will make a difference.

As my Grandma Rose Bach used to tell me, "David, when the going gets tough, the tough have cash." Cash is king. Cash is security.

Live Rich,
David Bach

Live and Finish Rich!

David Bach
Founder, FinishRich Media, LLC.
9 Time New York Times Bestselling Author
Author, #1 New York Times Best-Seller, The Automatic Millionaire
Author, #1 New York Times Best-Seller, Start Late, Finish Rich
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