Why Reserves are Vital in Financial Planning

Sandy Botkin
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The next several posts will deal with the important subject of “Reserves.” I get asked all the time, “I just saved up a few thousand dollars. Where should I invest it?” My answer is to set up a reserve! They are absolutely essential. So what is a reserve?

A reserve is a RISK FREE and penalty free fund of money that will be immediately available for use upon the occurrence of a major expense or unemployment or calamity such as:

* Job loss,
* Start up living expenses while you are building a business,
* Braces for kids needed within next three years,
* Big upcoming medical and dental expenses, not covered by insurance,
* Wedding costs that will be incurred within 3 years,
* College Costs that will be incurred within 3 years,
* Other unanticipated and unexpected events.

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