STEP 3  
Even while you're investing, save up
a cash reserve of 2 months' worth of income, if your
enjoy steady income, or up to 6 months' worth if your
income is volatile:
- Open a savings account or
money market with an automatic savings plan
paying a rate slightly above inflation like this
one offered by Ing
- Set up an automatic monthly
transfer from your checking account and let them
run automatically until you've saved up 2 to 6
months' income
- Keep your reserve liquid (no
tying it up in CDs), keep it safe (never put cash
reserve money into assets that may fluctuate in
value like stocks, mutual funds, or bonds) and
never touch it (if you do, building it back up
becomes your first investment priority)
NEXT
STEP
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The money that you spend you
lose forever, but the money that you save stays yours
| "You don't
have to earn a lot of money to be rich." - David Bach, The Automatic
Millionaire
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