Financial Independence Series
Financial
Independence Series
Emergency
Fund and Financial Buffer
Emergency fund is just common sense and structuring your
life so that you are not living a whisker away from disaster while the
Financial Buffer is the financial wall you build between yourself and economic
insecurity.
Emergency
Fund
You know and I know that you need to have a minimum
amount of funds saved to keep you from disaster. You have to save on your living expenses
whether you are a salary earner or profit maker. Don’t forget the amount you
keep in your emergency fund stems from your temperament, the stability of your
job, your age, your health, etc.
Financial
Buffer
The next step to your financial stability should be your
Financial Buffer which has been explained above that, it is the financial wall
you build between yourself and economic insecurity.
The financial buffer has a number of distinctions and
benefits beyond an emergency fund.
·
First, the buffer is often not invested in
cash. Instead, the buffer is in stocks, peer-to-peer lending, or other assets
that provide a decent return over time.
·
Second, the amazing thing about the
financial buffer is that at a certain point it takes on a life of its own. The
assets grow to a point where they throw off enough income and capital gains
that it's like you have another job--except this is happening automatically.
·
Third, and what I love most about the
financial buffer, is that it shifts your calculations. You can increasingly
think about the long-term. About what you want to accomplish and how you can
most contribute and help people.
·
Fourth, the Financial Buffer lets you take
risks you otherwise wouldn't be able to. You might even say it makes you more
courageous.
Finally, the Financial Buffer increasingly allows you to
direct funds to charity and other philanthropic efforts.
Author
0 Comments