Emergency Fund: How to Stop Being Reactive

"Customer service is when a company works everyday to keep our business so that they never face the threat of losing it.  It is the difference between a company that acts proactively and a company that simply reacts." --Simon Sinek

Simon Sinek teaches leaders and organizations how to inspire people. His wisdom is: we live in a world where we do too much reacting to situations. The unexpected will always occur; however, if we prepare better for them, we won't have to react drastically.

Customer Service For Yourself

The quote above is about customer service for a company, but what about serving yourself? As they say, you need to take care of yourself first; if you don't, you won't be any good to take care of your situation.

Getting Fit Gets You Prepared

Health comes to mind; most people don't exercise enough, eat right, or get enough sleep. I know, those resolutions are already broken two weeks into the new year. Here's a hint: take baby steps; for exercise, if you haven't done it in a long time, start slow. Don't run a mile on the first day; run a quarter mile. Take the next day off from exercise. Run another quarter mile for the next few times you exercise, then gradually build more distance.

As far as eating healthy, start by cutting out a few unhealthy things. I believe even when cutting, you can leave some bad stuff in. Personally, if I had to give up Oreo cookies as an occasional treat, I'd just have to die.

With proper exercise, a healthy diet, and plenty of sleep, you'll be better prepared when unexpected things come up.

Being Unprepared with Money Makes Emergencies Worse

Most everything that surfaces unexpectedly involves money; and usually, it means money is going out the door. (Unless, of course, you won the lottery, or someone passed away and left you some bucks; neither of which happens often.)

Those unexpected costs usually involve your health, your car, or your house. Know that they will happen; if the money part of it is taken care of, most of the battle is won. The problem is these occurrences are exacerbated by the fact we don't have the money to pay for them.

Keep Your Cool During Tough Situations

Knowing exactly where you stand at any time is the only way to to truly be prepared for an emergency. If you could subtract what you have from what you owe you'd arrive at your Liquid Number. If all your upcoming purchases and bills had to be paid today, it'd be what's left. In effect, your Liquid Number is your emergency fund for the unexpected situations.

Creating an Emergency Fund Isn't a Drastic Sacrifice

First off, you don't have to physically set money aside in a different bank account or under your mattress. You just need to have more than you owe. Our app, Liquid, makes it easy to see how much of an emergency fund you've got without you having making any changes.

Liquidity in Your Life

Like starting an exercise regimen, start out slow to get liquid. Your Liquid Number may even be negative, especially if you have credit card debt (transalation: you owe more than what you have). But, by spending consciously, you'll start to keep more of what you make. When you do that you'll be able to pay down what you owe and eventually have a positive Liquid Number.

Then when you get into a rough spot, you can confidently know you'll be able to pay all the bills and still be ok. You can't predict unexpected events, but you can have the money for the emergencies when they come.

So, when was the last time you had to be reactive in an emergency and that made it worse?