The Automatic Millionaire Workbook by David Bach

Author:David Bach
Language: eng
Format: epub
ISBN: 9780767920247
Publisher: Crown
Published: 2005-02-22T00:00:00+00:00

EXERCISE

The Rainy Day Fund Builder

How to use it: In Part 1, write down all your monthly survival expenses. Survival expenses are things you need to keep a roof over your head, keep clothes on your back, keep food in your cupboards, keep your family healthy, and keep from defaulting on your debts. Cable TV and dinners out are NOT survival expenses. When you have them all listed, add them up.

Then comes the tricky part: your risk factors. In Part 2, take an honest look at how vulnerable you are. Are you or your spouse in a job where you might be laid off at any time? Does someone have a medical problem that could result in big hospital bills? Could your pipes burst at any moment? If you have risk factors like these, you can see why you need to plan for them and add to your monthly emergency money. When you've added any risk factors, add that percentage to your regular monthly expenses, and that's the size of the rainy day money cushion you need to save each month.

In Part 3, simply ask yourself how many months' cushion you need to have peace of mind. Multiply that number by your rainy day money amount—that should be your emergency savings goal.

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