Whether you are a young adult just starting out on your own in the world, or a middle-aged person with little in the way of savings, my advice applies here.  And even if you have a significant net worth, I hope this post helps you.

In terms of personal finance, a lot of people just don’t know where to start.  Too many people get bad advice, or read an article thinking they can get rich quick if they just put all of their money in this one investment.

For someone starting out, my advice is to save $10,000 and to keep it liquid.  By liquid, I mean that it should be in cash and/ or in a bank.  It can be in a checking account or a money market fund that pays 0.01% interest.  It is important to keep this money there unless it is needed for an emergency.

If you want to invest in gold coins, you should first have $10,000 in the bank and not use any of this for the purchase of gold coins.  If you want to trade stocks, you should first have $10,000 in the bank and not use any of this for your brokerage account.

If you want to buy real estate (whether to invest in or live in), you should first have $10,000 in the bank.  Then you should get another $10,000 in the bank.  Then you should save up what you need for a down payment and closing costs.  The second $10,000 you saved should act as a reserve fund for unexpected (which are really expected) expenses.

The prepping community has grown large, but I wonder how many of these preppers have $10,000 in the bank.  Because even in a crisis, money is one of the best things to have on hand.  In certain situations, maybe food would be better.  If you want to be prepared and buy a few hundred dollars worth of food, make sure it is something that you will eat even if there is no disaster.

I am not against being prepared for unexpected events.  But it baffles me when people prepare for highly unlikely events.  And even if those events did happen, their preparations probably wouldn’t get them that far anyway.  In most situations, having money on hand will help you in a lot (not all) difficult situations.  There is an argument to be made to have some cash on hand for certain scenarios (as opposed to it all being in the bank).

I am a libertarian, but it never ceases to amaze me how many other libertarians there are who are really irrational when it comes to personal finance.  They might think hyperinflation is right around the corner, and they prepare themselves for something that is highly unlikely to happen any time soon.

I advocate a permanent portfolio.  Within that, I advocate owning gold and gold-related investments.  But I still think it is best to have $10,000 in liquid funds before going the route of the permanent portfolio.

While I am fully aware of inflation and the depreciation of the dollar, I don’t think we should shoot ourselves in the collective feet by worrying about a 2% loss in value each year.  (If price inflation picks up, then the interest rate on your money market fund will likely increase as well.)  Having available liquid funds is far more important than having a portfolio of inflation hedges.  It makes sense to have money that can be exchanged for goods and services.  It also makes for less stress.  If you do have an emergency, then at least you don’t have to scramble as much.

I think everyone’s financial goal should be to first save $10,000 in liquid funds.  It is a buffer in life.  It may not be the top piece of financial advice I can give.  Probably the best advice for someone young is to make sure they marry the right person.  But after that, the advice of saving $10,000 is at or near the top.

About half of Americans have very little money saved, if any at all.  It makes it stressful to go through life in this condition.  It is never fun to get hit with an unexpected expense (which, again, are often really expected expenses).  But there is a difference between “My car needs an expensive repair and I don’t know how I am going to pay to fix it” and “My car needs an expensive repair, so unfortunately I will have to tap into some of my reserve funds to pay for it”.

If you have the money in the bank, then an unexpected expense that comes up isn’t as bad.  You aren’t happy about it, but it doesn’t have to keep you up at night.

This is really the biggest reason to have liquid funds.  It means less stress.  It also enables you to focus on the longer-term picture in life. It also enables you to take advantage of discounts, such as paying for insurance all at once, instead of a higher monthly premium.  It also enables you to take advantage of unexpected opportunities. On this last point though, you do have to be cautious not to waste your money.

In conclusion, if money is a stress for you, then find a way to save up $10,000 in the bank.  Do what it takes (reasonably speaking), as long as you are not neglecting your family or your health.

With all of the personal finance advice this world has to offer, sometimes it is easy to overlook the basics.  You should have $10,000 saved up, even if you aren’t earning any interest or passive income from it.  The earnings will come in the form of less stress.