Establish a “freedom fund”

Money Management Tip of the day:

Establish a “freedom fund.”

Having money set aside for emergencies is key to avoiding financial disaster. It will cover you if you’re in between jobs, and give you the freedom to leave a bad relationship or a job you hate. It allows you to sleep easier at night, knowing that you’ve given yourself some financial security.

Ideally, your freedom fund should have enough money to cover three to six months of living expenses. You won’t reach that level overnight, but don’t let that discourage you: Simply set aside as much as you can each paycheck until you hit your goal.