Part 4/11:
Setting financial goals—like saving one month’s worth of expenses—is essential for establishing a financial cushion. Graham advises that individuals should cut back on impractical spending based on their tracked expenses. This process allows for the identification of unnecessary expenditures and encourages individuals to reconsider their consumption habits.
Building a Safety Net
Once individuals have a clear grasp of their financial outflow, the goal should be to save at least one month's worth of expenses. This safety net supports unexpected situations, such as emergency car repairs or sudden job loss. Emphasizing self-discipline, Graham underscores the necessity of sometimes sacrificing small comforts today for greater financial security tomorrow.