Create an Emergency Fund
A key part in financial independence is having enough stashed away that you can weather a surprise. Now that you've learned how to save money you need to start a separate savings account for an emergency fund. And then get $1,000 in there. Sell something if you need to. Once you have this $1,000 you can weather an unexpected bill and really make a dent in your debt reduction.
Already paid off all the other debts?
Then work towards building up a full fledged emergency fund. We recommend saving 3-6 months of expenses just in case you lose your job, or have a giant unexpected repair bill. If you’re on a single income or in an unstable industry you should lean more towards six months. If you make over $100,000 per year, congrats! And you should look to save 6-12 months as higher income jobs can take a bit longer to replace in an industry downturn.
What do you use it for? Emergencies. Losing a job, repair a roof. Travel is not an emergency. Christmas gifts are not an emergency. A new car is not an emergency.
That’s it. Save it up, put it away in a savings account that’s guaranteed and hopefully earns a little bit of interest. Simple. But not easy.