Chapter 02 · Beginner · 5 min read
Your safety cushion
The boring account that makes investing possible
Why three to six months of costs in cash is the thing that keeps you invested.
Why cash first
Investing works when you can leave the money alone. An Cash set aside for surprises so you never have to sell investments in a hurry. is what stops a broken laptop from forcing you to sell at the worst moment.
A common guideline is three to six months of essential costs, held in cash you can reach quickly.
How big is yours
Stable salary, no dependants, cheap rent? The lower end may be enough. Freelance income, kids, or a single income household usually points to the higher end.
Build it in stages: one month first, then three, then six. Each stage buys you calm.
Where to keep it
Somewhere separate from your everyday account, easy to access, and covered by your country's deposit guarantee scheme. Boring is the feature.
Words worth knowing
Open dictionary- Emergency fund
- Cash set aside for unexpected costs and income gaps.
- Deposit guarantee
- A national scheme protecting bank deposits up to a set limit.
- Liquidity
- How quickly you can turn something into spendable cash.
What is the main job of an emergency fund?
Try it yourself
Add up one month of essential costs. That number is your first savings target.
Can you spot it?
Someone with no cushion invests everything, then the boiler breaks. What do they have to do?