Financial Wellness starts well before investing money, before you invest you should save. The first step should be creating an emergency fund that has either 3 months or 6 months worth of living expenses. Emergency Funds are best put in an interest earning bank account, such as a Money Market. Having an emergency fund creates financial security and flexibility.
Create a list of your monthly expenses and then write down your monthly income. This will help you determine the best amount to set aside either weekly, bi-weekly or monthly.
Here's an example formula to use:
Let's say you get paid bi-weekly, open up a money market and put $50.00 in each paycheck. In the beginning it might appear like nothing is in there but you should never pull from this account until you build up the expected goal. So let's go through and see how it can add up over time.
In 1 month you have $100, in 12 months you have $1,200 and in 10 years you have $12,000. Now once you get to your target goal you don't need to continue to put money into this emergency fund. If and only when you have an emergency do you pull from this fund.
When should you touch your emergency fund?
Remember this account is known as the last resort. Think about it, Is there a need you have to survive, if not think twice before you touch the emergency fund.
Here are some examples of what the emergency fund should be used for.
Job loss and you need to pay bills
Medical expenses
Repairs
Home
Vehicle
After having to pull money from your emergency fund you will need to rebuild the fund. Start putting money back in the money market to recoup what you spent. You should resume putting $50 per paycheck to build the emergency fund back up.
In summary, We must start somewhere in order to continue to grow and improve. Maybe you can't start today, maybe you can't start tomorrow but remember the important thing is to START.