Lisa Whitley— I recently asked a good friend what personal finance question was top of her mind these days. Her response was one that sounded pretty familiar:
In general, questions about how to balance equally compelling priorities are probably the most common...and the trickiest to answer. The answer is almost always “it depends.” Here is a hopefully useful approach to this particular conundrum:
Then, having accomplished that first milestone, turn on your retirement contribution again, but only up to the employer match percentage until you have achieved your next milestone — an emergency fund equal to at least 3 months of expenses. That said, for many people, 6 months (or more) is the new 3 months; even if you feel stable now, you will want to think very creatively about how you and your family may be impacted by a prolonged economic downturn. Once you have hit your emergency fund target, then you can fully turn your attention back to your retirement account and increase your contribution.