Unfortunate stuff happens, and suddenly you need some cash. Taking money from your 401(k) will cost you money, borrowing sours relationships, and don’t be fooled into thinking that your credit card or home equity line counts, as it may not be there for you if you need cash in a credit crunch (um, remember ’08-09?).
Redirect 20% of your paycheck to a savings account until you have stashed away enough cash to cover three months of expenses (but feel free to thrill us with a six month stash!). You aren’t going to earn much on cash these days and doing the right thing might mean taking a break from funding your 401(k) or delaying that trip to Bali (yes, we said it). Trust us, it will be nice to know that when an emergency rears its ugly head, you can channel your inner Jennifer Hudson and sing, “I got this.”