Cash Management

Chapter 5 discusses cash management and the liquidity of your assets. It is a general rule of thumb to have 3-6 months income worth of liquid assets in your emergency reserves. These reserves would only be used in case of an emergency such as a illness, job loss, or any serious event that would strain the family financially. If someone did not have these liquid assets set aside, when an emergency happened they would not be able to handle it. They may have to sell their car or home to be able to cover the cost of the emergency. Obviously in time like these, it would be extremely stressful being financially prepared would help a family be less stressed. If someone is ill the last thing the need to worry about is money, someone who is less stressed has a better chance of recovering from a serious illness. Having an emergency fund is extremely important, must families think something serious will not happen to them, but it could and we all need to be prepared.