Dave Ramsey's Approach to the Emergency Fund

An emergency fund represents 3 to 6 months of monthly expenses put into a special account (not checking or savings) for the purposes of an emergency.

Some people hesitate to start an emergency fund because they may be in debt or they may be in a bind financially. Art Williams once said, "All you can do is all you can do, but all you can do is just enough."

No matter where you are in life, do what you can do. If you can only contribute $5, contribute $5. If you put $100 aside, put $100. Whatever you do, do it consistently and you will see your savings grow.

When a person lives paycheck to paycheck and an emergency arises, they are forced to borrow from their credit cards and pay high interest and fees. This is all too common and probably the reasoning behind Dave Ramsey's argument for building your emergency fund while simultaneously paying off debt.

See what Dave Ramsey has to say about the emergency fund:


This post was reposted from http://finlit.biz/estate-planning/dave-ramseys-approach-to-the-emergency-fund/, originally written on May 20th, 2014.