C H A P T E R       3     

Step 1: Set Up an Emergency FundProtect the Purchasing Power of Your Emergency Cash

In my experience, elegant solutions tend to be relatively simple once you fully understand the problem and come up with an intelligent method to deal with it. That's why this chapter is relatively short, but still important.

As we saw in Chapter 2, if you do nothing about price inflation, then the emergency fund that is designed to cover your expenses for at least 6 months (preferably 12) if you lose your main source of income will steadily lose purchasing power. This will manifest itself by your monthly expenses steadily increasing but the balance in your checking and savings accounts barely changing.

So what can you do to prevent ...

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