Don’t ignore an emergency fund
When I first graduated, I set up my 401(k) and contributed enough to get the full match, but then I was putting everything I could into my student loan payments. It wasn’t until I had a meltdown after receiving a larger-than-expected medical bill that I came to appreciate the importance of an emergency fund.
There will always be large, unexpected expenses in life, whether it’s a medical bill, a flat tire, a family emergency that requires a flight home, or something else unexpected. An emergency fund prepares you for that inevitability and allows you to tackle the challenge without resorting to your credit card (see above about how quickly compound interest can come to hurt with credit card debt).
Ideally, an emergency fund should be big enough to cover three to six months’ worth of expenses, but you can start small – even a few hundred dollars can help give you a buffer as you get started.
