The Savings Cascade
The Savings Cascade Before making any risky financial plays, you must first build a firm foundation. A healthy saving and retirement fund allows you greater compliance in making riskier financial decisions since your overall exposure to risk will be much lower. The Savings Cascade is both a litmus test and a template to help you understand when and if you are ready to try your hand at nontraditional investments and possibly (though hopefully not) trading. High Liquidity Funds 1. Checking Account Your checking account should be the backbone of your day-to-day financial life. It should contain 1-2 months of necessary expenses but should not exceed more than 4 months of necessary expenses. There should be just enough money to pay the bills on time, but not so much that you're losing out purchasing power and investment opportunities in order to pad an already ample supply of readily available cash. If you're currently living paycheck to paycheck there...