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Being Prepared: Building Your Financial Reserves

September is National Preparedness Month, and this is part of our “Being Prepared” series.

In today’s world, it is pretty hard to stash away some money. Even harder is being prepared for anything that may come your way. It could be a medical issue, unemployment, or a number of other reasons. Either way, building your financial reserves is just plain common sense.


Nobody likes being in debt! And I’m willing to bet that we can all agree that being slave to the lender sucks. But if you have debts, there is no better time than now to work on eliminating them so you can start “prepping.”

  • Credit Cards: These evil little things get too many people into too much trouble. It’s real easy to pull out that little piece of magic plastic and buy whatever is in front of you. At least until you go to the mailbox at the end of the month and find out that you really do have to pay for it. Credit cards should be your first step in getting rid of your debts! These little magic cards have fee after fee, and on top of that the amount of interest alone can sink you. Probably the best advice out there comes from Dave Ramsey in the form of his “debt snowball.” You start with the smallest one and pay it off, so you can turn around and use the money you were paying on that one to help pay off the next one.
  • Auto Loans: For the most part, most everyone needs a car to get to work and get from here to there. This is not the time to make an excuse to go out and buy that cool new car! Who cares what car you drive, as long as you get where you are going. Don’t get caught up in the trap of having a new car. If you don’t know how sweet it is to pay cash for a car, then you are really missing out. So how do you do that? Instead of borrowing money from someone else and paying them interest, pay yourself. What? Pay the amount of money you would pay someone else for a car loan to yourself into an account that you will later use to pay cash for. Don’t pay someone else when you can pay yourself!
  • School Loans: Hurry up and pay these things off! Now that you have no credit cards and you’ve just paid for that new car with cash, this should be your next priority. And with the amount of money you’ll be throwing at these student loans, you’ll be able to kill them off in no time.
  • Mortgage: Can you imagine the day you pay off your house? What about the amount of freedom it may feel like once you do? Realize this: in a matter of no time at all you’ll be able to do and feel that because it will be the only debt you have. Once you’ve reached this stage, you can start to put some money aside and start to really build a financial reserve.


At any point along the way, you can start building your financial reserves. Just because you are working on eliminating your debts does not mean you can’t put a few dollars aside for an emergency. So how can you get started?

  • Start Small: As with everything, start out small and work your way up. It can be as small as a dollar a week, or a hundred dollars a month. It doesn’t matter how small you start, just get started! Don’t think you can? How much are you spending on going out for lunch all the time? Or what about all those killer Starbucks lattes? I challenge you to add up what you spend on all of that stuff and look at the total dollar amount spent. Is that enough to make you realize you can start somewhere? Can you cut out something so you can start to build your financial reserves?
  • Start With The End In Mind: If you have a goal and know where you are going, it can make all the difference in the world. Having the end in mind will allow you to work your way backwards and build small, manageable goals toward your reserves.

Again, this isn’t the bible on how to build your financial reserves. It’s a starting point. For most people out there, the rule of thumb is 3-6 months. But, start small and work your way toward whatever your goal may be. Just remember that having financial reserves during any hardship or disaster can make dealing with it that much easier.

About Daniel Stafford

My name is Daniel Stafford, aka The Stafford Voice. I may be only one 'Conservative in a world of Liberal,' but I don't and won't let that stop me. Just because I don't wear the uniform anymore doesn't mean I'm not a soldier!

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