Why Net Income, Not Just Expenses

Saving only for expenses assumes you’ll cut your lifestyle in half if you lose your job. That’s survival, not freedom. By saving your net income, you protect your family’s standard of living, giving you space to find the right job—not just the first one that comes along.

Step 1: Calculate Your Net Income

Look at what actually lands in your bank account each month after taxes and deductions. That’s your target amount. Multiply it by 3, 6, or even 12 months depending on your career stability and comfort level.

Step 2: Build It Gradually

This step takes time—sometimes years—and that’s okay. After completing Baby Step 2, redirect your debt payments into this fund. Consistency matters more than speed. Every deposit is another layer of security.

Step 3: Keep It Safe and Accessible

This money isn’t for investing—it’s for stability. Keep it in a high-yield savings account or money market account where it’s protected and liquid. It should be boring, not risky.

Step 4: Enjoy the Confidence

Imagine losing your job and knowing you have 6 months of full income in the bank. No panic, no rush, no slashing your lifestyle. That’s not just an emergency fund—that’s peace of mind at the highest level.

Takeaway

Saving 3–6 months of net income is more than an emergency plan—it’s a freedom plan. It ensures you can navigate life’s storms without sacrificing your values, your lifestyle, or your confidence. This is the step where financial freedom starts to feel real.