3 Money Habits to Prepare for Unexpected Expenses
CreditLimit.io
3 Money Habits to Prepare for Unexpected Expenses
Unexpected expenses can derail even the most carefully planned budgets. Financial experts recommend developing specific money habits to safeguard against such surprises. This article explores key strategies, including emergency savings, real estate investments, and smart commission management, to help readers build a robust financial safety net.
- Build an Emergency Savings Account
- Invest in Real Estate for Passive Income
- Set Aside Portion of Commissions for Emergencies
Build an Emergency Savings Account
One money habit I adopted to prepare for unexpected expenses was automatically transferring a small percentage of each paycheck into a separate emergency savings account. I treated it like a non-negotiable bill—even if it was just $25 a week. This habit helped me build a cushion without feeling the pinch.
When my car needed an unexpected $900 repair, I didn't have to rely on a credit card or take out a loan. That emergency fund covered the cost, saving me from added debt and stress. The peace of mind it provides is invaluable, and it's a simple habit that anyone can start today, no matter their income level.
Invest in Real Estate for Passive Income
The most impactful money habit I've adopted has been increasing my passive income, specifically through real estate investing. This one habit completely changed my finances. Before I became an investor, I was making a good salary, but I was always trading my time for money. Since I wasn't passionate about my career, I decided to build alternative income streams to make money outside of my 9-5 and ultimately retire early.
That's exactly what I did: By temporarily working two jobs and saving as much as I could spare, I was able to afford a down payment on an investment property at 23. From there, I kept reinvesting my returns until I was making enough through renting out my properties that I could retire.
So, here's my advice to anyone who wants to be truly financially free: Build passive income streams, ideally when you're still in your 20s or 30s. That way, even if you get laid off or want to retire early, you'll have a financial cushion for you and your family.
Set Aside Portion of Commissions for Emergencies
One money habit I adopted early on—thanks to my experience in real estate and finance—is automatically setting aside a portion of every commission into a separate emergency fund. When a furnace went out in one of our flip properties last winter, having that fund ready meant we could handle the repair immediately without derailing our business or stressing about cash flow. Proactively planning for surprises has saved me more than once, both personally and professionally.
