Conventional wisdom says that when you start a new job or get an opportunity to invest into a 401 K plan you do it. According to Pop Culture Finance, it is the #1 priority. This is true especially if you are young.
Why save for the long-term when you have no money for the short-term? You can have hundreds of thousands of dollars socked away for the long-term. If a short-term emergency happened, all of that long-term money is no use to you (unless you want to borrow from a 401 K plan which isn't always a great idea).
Being an investment advisor restricts me from guaranteeing anything beyond death and taxes. However, an almost certainty (close enough to a guarantee) is that you will encounter unforeseen expenses at least once in your lifetime. This underscores the importance of the emergency fund. Yet, people don't have this basic necessity taken care of. Here are some stats from www.mybanktracker.com.
They asked Americans how much they have set aside if they lose their job, experience a medical emergency or go thru a natural disaster. Here are the results:
43.3% have <$500 (109 million) – that's 2 out of 5 Americans!
34.5% have $0 (86.96 million)
14.5% don’t even know what one is (36.5 million)
51.6% have <$1,000 (130 million)
62.6% have < $5,000 (157.79 million)
An emergency account isn't an investment account. It is risk free money that you keep in cash to handle life's emergencies or unexpected situations. Yet, people live as if that will never happen. I would suggest that the emergency fund is the #1 priority in your overall financial plan. If you don't have an emergency fund set aside, you will use the credit card - not is typically the only other source of payment. Besides materialism, emergencies or the unexpected cash expense is the reason why we have over 1 trillion dollars worth of credit card debt.
So, do yourself a favor. Skip the 401 K plan for a year or two until you get the short-term taken care of or risk innocently building unexpected credit card debt.