Now that you are free of all debt apart from any mortgage that you may have it is now time to super charge your emergency fund so that you have 3-6 months of expenses saved. This money again should be placed in a saving instant access account so that in an emergency you can withdraw the money if required without any penalty. Again this money should not be used unless it is a genuine emergency. You should not invest this money in any type of investment as we are really not concerned about this money making you money it is purely to be used for its purpose.
Now that you have paid off all of your debt it should not take long to save enough money as long as you still stick to your budget as quick as you can complete this step you can start to ease off on your budget.
Again this fund will become very important for any future unseen events. This fund can be used to fill in gaps in your budget for those inevitable emergences. However it should not be used for events that are totally predictable such as Birthdays, Christmas, Car service of MOT and other things that should be saved for from your budget.
An example of an emergency would be something unexpected going wrong with your car that needed to be fixed to allow you to keep driving your car or if you have something happen to you teeth or health that you need to pay for to get fixed in a timely manner.
The emergency fund should be a minimum of 3 months of expenses but if you believe your job or income is not secure then you should try and make you emergency fund to be nearer to six months of expenses.
If at any point during this process of saving the emergency fund you hear that there is a possibility of losing your income then you should really tighten up you budget and save as much money as possible in the short term.
Once again we need to be clear that this fund should be used for emergencies only and should not be used to make up for shortfalls in your budget. Also the fund should be instantly accessible without penalty or risk of losing you money.
Just by saving this simple emergency fund will put you ahead of the vast majority of people in the western world and will prepare you for a successful financial future.
Please let me know what you think in the comments section and let me know how you are getting on with paying off your debt. Also if you have any questions please leave a comment or visit the facebook page
The Normal Person