A key necessity to living a simplified financial life is to be prepared for the unexpected.  You just don’t know when your car may need a major repair, when the next natural disaster will strike, when that unexpected medical expense will occur.  You say, “Wait my homeowners or medical insurance will cover this expense”.  That is true it may cover some but what about the portion it does not cover.  Where will you find the money?  For example, your medical insurance may cover up to 80% of your medical expenses.  So guess what?  You’re responsible for the remaining 20%.  Another example might be when you file a claim with your homeowners insurance.  You will have to cover the policy deductible, which can be several thousand dollars.  Where will you get the money to pay the medical expenses or insurance deductible?

This is why it’s critical that you establish an emergency fund which can cover these unexpected expenses.  Not having an adequately funded emergency fund can place a significant financial burden on you.  Here are the benefits to having an emergency fund:

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We all do it but not intentionally. We open multiple personal bank accounts without considering the reason we opened them. You then end up having more accounts then you need which makes it harder to keep track of your money. Here are things to consider before you open your next bank account in order to simplify your personal financial lifestyle.

Purpose – Before you sign the documentation to open another bank account you must determine the purpose of the account. Ask yourself the following questions:

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Everyone wants to know what stock to buy; how to save; what financial steps to take first; but it all depends on you. Try this, look in the mirror and ask yourself, “what is important to me or where do I want to be in one year, five years, or ten years?” No one can answer that question for you, it’s all up to you. Begin by writing down what is important to you and visualize where you want to be and and in what length of time you’d like to get there. This will not only guide you, it will help you focus so that you can begin to target your objectives, develop your goals and accomplish the things you want to do. The clearer the picture, the easier it is to focus.

Before you seek advice on how to get there you must know where you want to go. For example, if you just jumped in a taxi cab would the driver know where you wanted to go without you telling him or her? No, unless the driver is a mind reader. I don’t know of any cab drivers that are mind readers. So like a cab ride, before you can jump into it and ask someone to help with your finances you must know where you want to go so they can help you get there the quickest most direct way.

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