I will strengthen the core portfolio of my personal finances.
I consider the following elements to be the core building-blocks of my personal finances:
- Emergency Fund,
- Health Insurance, and
A big emergency fund, adequate health insurance, and freedom from debt, are what let me sleep peacefully at night. I still recollect that night, about six years back, when I couldn’t sleep because I’d taken a loan from my employer for paying my credit card balance. I don’t want to experience that ever again. That said, here’s what my core portfolio looks like at present.
- I have an emergency fund equal to 4-months worth of monthly living expenses. Three-fourths of this serves as my job-loss emergency fund and the remaining quarter serves as my general-purpose emergency fund.
- I have individual health insurance policies plus work-provided health benefits for me and D from my employer.
- I have cleared all my debt.
Much of this was done in 2010. From here, I’d like to move-up into the position outlined below.
- I’d like to first increase my emergency fund to cover 8-months worth of monthly living expenses. The 3/4 : 1/4 split between my job-loss emergency fund and general-purpose emergency fund would still continue. (Then, in 2012, I’d like to increase this further to cover 12-months worth of monthly living expenses.) I define 1-month’s worth of living expenses as the amount of money that I believe to be adequate for my family to lead a decent lifestyle for 1-month.
- I will continue our present health insurance cover. Additionally, I will look for individual health insurance policies to cover D’s parents (they’re covered right now through D’s work benefits).
- I will continue to remain out of debt.
If I manage to do all these, then by end-2011, my core personal finances will be twice as solid as they are today.
Over to you now. How strong is your core personal finance portfolio?