Posted by If you’re someone who’s committed to taking control of your finances, then you’re probably well aware that budgeting is the cornerstone of any solid financial plan. However, when it comes to planning for unforeseen expenses, even the best-laid budgets can fall short. That’s where the idea of a Freedom Fund comes in. In this post, we’ll break down what a Freedom Fund is, why you need one, and how to build it.
What is a Freedom Fund?
Why do you Need a Freedom Fund?
How to Build a Freedom Fund
What is a Freedom Fund?
Freedom Fund is a term used to describe money set aside for unforeseen expenses, such as car repairs, medical bills, or unexpected home repairs.
Why do you Need a Freedom Fund?
The answer is simple – to prepare for life’s unexpected expenses. An emergency fund provides a sense of security in knowing that you have a cushion to fall back on when unexpected life events occur. Without a Freedom Fund, an unexpected expense may require a loan or credit card which can lead to debt and interest payments.
How to Build a Freedom Fund
Building a Freedom Fund doesn’t have to be complicated. Follow these simple steps to get started:
Save money from every paycheck: Dedicate a percentage of your income to building your Freedom Fund
Set a savings goal: Determine how much you need to save for unexpected expenses. A good rule of thumb is to have at least 3-6 months of living expenses saved.
Open a savings account: Dedicate a separate and high-yield savings account for your Freedom Fund
Make it automatic: To avoid the temptation to spend it, set up an automatic deposit to your Freedom Fund every month.
Avoid dipping into your Freedom Fund: Reserve your emergency savings for true emergencies.