Welcome to Radical Personal Financial Show dedicated to providing you with the knowledge, skills, insight and encouragement you need,

a lever rich and meaningful life now, while building a plan for financial freedom in 10 years or less.

Today we continue our five-part series called You Don't Have to be smart to become

financially independent, but you can't be stupid. And here today part four is

called Avoid Catastrophe. I've been building on my five-part framework for wealth. In part one we talked about

increasing your income and I shared with you the very simple idea that if you're

just hard-working and diligent and conscientious you can probably earn enough money in the

industry you're in to become financially independent.

In part two with regard to expenses, I talked about controlling the big expenses and just keeping them under control

so that you'll always have more money left at the end of the month than month at the end of money. In part three I talked about investing wisely,

simply choosing a simple strategy and following it, and not being stupid, and today I want to talk about

avoiding catastrophe. Realistically, most of us won't face

many catastrophes in our life. And you already know most of the things that you need to do to avoid those catastrophes.

First, you need to have an emergency fund.

Six months worth of expenses for your household is a perfect number to shoot for.

For most households that'll be somewhere between 10 to 20,000 dollars.

If you'll just simply make sure that you have 10 to 20,000 dollars, always set aside in a bank account, in cash and your home safe or wherever you keep your valuable items.

You can weather the vast majority of emergencies that happen.

Your great Aunt Sue got sick.

You need to fly up and see her before she dies. You've got the money to buy the plane ticket.

Car breaks down, needs a new radiator, you've got the money to pay the mechanic.

Kid gets sick. You're out of work for a few days because your home taking care of your sick.

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