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How to create an emergency fund

Prepare for unforeseen events with a financial buffer

An emergency fund is an essential element in any sound and serious financial plan. This financial cushion provides security and peace of mind against unforeseen events such as job loss, unexpected medical expenses or home repairs.

When thinking about creating it, you should be clear about the amount you need. You can start with the equivalent of three months of your monthly expenses, and save in a separate account until you reach that amount. Remember that it is important that such savings take place in a separate account, but that it is easily accessible.

By having an emergency fund, you can face unforeseen situations without resorting to loans or credit cards, thus avoiding accumulating more debt. But it is important to keep this fund reserved exclusively for emergencies or unforeseen events that may arise and avoid using it for unplanned expenses.

Also, remember to periodically review and adjust the amount of money in your fund, according to changes in your expenses and financial situation. And of course, be prepared to replace as soon as possible the amount used in any unforeseen event.

Over time, you can increase this financial cushion with the equivalent of six months, a year, or whatever you can foresee. By increasing that contingency cushion, you also increase your peace of mind and increase your focus on the things that are really worthwhile. As an anti-stress tool, it is most effective.

It will help you get out of debt, and not get more, and it will also help your mood to know that you can maintain financial stability in the long term. Be prepared to face unforeseen events with a well-nourished financial cushion and strengthen yourself in the discipline of maintaining it and making it grow over time.

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