Emergency fund first

Simple explanation

Before investing for the long term, build a safety net of cash — usually 3-6 months of your fixed costs — in a regular savings account. So you never have to sell investments at a bad time.

Picture this

A safety net under a tightrope walker. You hope to never need it. You'd never walk without it.

— Cash

Real example

If your fixed monthly costs are €2,000, your emergency fund should be €6,000–€12,000. Boring number. Life-changing protection.

Common mistake

Skipping the emergency fund and investing everything. Then life happens — a job loss, a repair, a hospital bill — and you're forced to sell investments when they're down.

Quick check

Takeaway

Boring foundation first. Glamorous growth second. Order matters.

Related glossary terms