III. The Basics: An Emergency Fund

In my last post, I briefly mentioned you should set aside a certain amount into savings. Here I will expand on where savings should go. 

One important saving priority is building an Emergency Fund.  This is a fund that is easily accessible made up of 3-6 months worth of your living expenses. Though you may barely have enough money to live on for the month, having 3-6 months of money may seem impossible, but you can slowly reach that with consistent saving. Which introduces the principle of paying yourself first, by saving your money before you spend it anywhere you will forget you have that money, and won't come up short at the end of the month to save. 

Try an automatic savings plan in a high yield interest bank. I use an ING Direct Account to place my Emergency Fund. The interest rates are high, I can divide my savings accounts up into several categories, and I get a high interest rate. I don't have an automatic savings plan yet since I don't have a real income and I get all my money from my parents, so I have to deal with the pain of taking out a portion of my money I can't use.