I feel silly about writing this article on why should you save $1000. I don’t know what’s your situation may be but saving is very hard for me. I am no different from many American. I spend more than I can ever afford. I only make closes to $30,000 a year but I spend about $20,000 on things I don’t need a year.

Does personal finance affect your investing? I would tell you to fix your personal finance first before you start investing. I got this from buying Dave Ramsey book. I agree to most of the things he talk about. This is the following phases he set out:

Saving $1000

The first step is to save $1000 for emergency fund. If you already save $1000, then this article is not for u but reading never hurt. $1000 should be only for unexpected expenses. I know it not much but it a start.

Snowballing Debts

After you save $1000 you should start paying down your debts, because before investing debts must be payoff or maintain. Investing is making a extra income with risk. When you pay down debts you are making money for yourself, because you don’t have to pay the interest rate on it. If you are still using credit card, then the balance on the credit card must be in control for you to pay off every month.

7 months to year of saving

After you finish paying down your debts, then you should start saving for unexpected expenses for 7 months to a year of saving. The reason for this is that you want to have a margin of safety. When something come up, you know you have money to cover it. You feel better this way. You don’t have to sell your stocks like I do. Why am I telling you this if I can’t even save 7 months to a year of saving? The reason is that I am in the second phase of snowballing down my debts. I do have a goal but I’m not there yet.

Anyway too much reading, willl continue this discussion later, thank you very much for reading my article.

Cheesecake signing off