I keep hearing ‘Pay off debt, have an emergency fund, then invest.’ How do I calculate how big my emergency fund should be?

While the size of your emergency fund will vary depending on your lifestyle, monthly costs, income, and dependents, the rule of thumb is to put away at least three to six months’ worth of expenses.

Investment is on a different plane though. It is key to accomplishing one’s financial goals and provides a buffer for unforeseen expenses that may arise in the future. Intelligent investing is understanding that investment is the key to building wealth.

You have the potential to lose money when you invest, yes, but if you invest wisely, the potential to gain is higher.

Money that is not invested will depreciate overtime, bringing its buying power down. What this means is that $100 today will buy you less tomorrow than it does today – it’s worth decreases over time, unless invested.

It is not appropriate to link debt obligations and emergency fund requirements with investing. Staying invested in the market is the golden rule to generate wealth. Investing can only enhance and complement an individual’s future requirement for cash flow and liquidity.