Your savings ladder is just a step-by-step guide to where you should put all your savings.
I used to call this my Emergency Fund, but I have since changed the name to the Life Happens Fund. Because Life Happens, and you can’t possibly plan for everything
Usually, when things get tough (as they usually do), the first thing people do is lower their long-term saving contributions. By putting this money away now, you are making sure that at least you have some form of long-term savings put away.
This is the “Emergency Fund.” Take all your expenses, multiply that by 6, or take only the bare minimum and multiply by 3. This is the amount that you need to have in this account.
What are your upcoming big expenses? Finishing your degree? Going to graduate school? Are you planning a wedding? If none of these apply, then you can just start putting money away for a house.
What should I do with my money?
Why should I start saving money now?
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How do I save money?