Investing is great. Besides starting your own business, it is one of the best plans for growing your net worth and achieving financial freedom! But there are a few steps to take before you get started. If you don’t set yourself up for success by taking care of these items first, you’ll be setting yourself up for failure down the road.
Here is what I recommend you take care of before you start investing…
1. Have A Fully-Funded Emergency Fund
First things first. Unexpected expenses WILL happen. No matter how good you are at planning and preparing, something will happen sooner or later that wasn’t on your personal spending radar. I don’t mean “NFL is starting soon so I need a new TV” – I mean more along the lines of “the water heater just gave out and we need to replace it ASAP”.
These expenses are generally not only unexpected, but they also are time-sensitive – they need to happen “now”. Without an adequate emergency fund in place, many people will struggle to cover even a $400 non-budgeted expense.
Financial advisors, financial planners, and just about every financial expert will recommend having an emergency fund between three and six months worth of living expenses. If you don’t have an emergency fund you should quickly p