In this episode of the Personal Finance Podcast, how much you should have saved and invested in your emergency fund.
Here is the link to Index Fund Pro!
Use Promo code INDEXFUND30 (all caps) for 30% off index fund pro until January 10th!
Thanks to Our Amazing Sponsors for supporting The Personal Finance Podcast.
Chime: Start your credit journey with Chime. Sign-up takes only two minutes and doesn’t affect your credit score. Get started at chime.com/
Shopify: Shopify makes it so easy to sell. Sign up for a one-dollar-per-month trial period at shopify.com/pfp
Policygenius: This is where I got my term life insurance. Policygenius is made so easy. To get your term policy go to policygenius.com and make sure your loved ones are safe.
Factor 75: Head to factormeals.com/pfp50 and use code pfp50 to get 50% off your first box. These are amazingly easy and nutritious meals.
Delete Me: Go to joindeleteme.com/PFP and use promo code PFP you’ll be able to save 20% off your DeleteMe subscription! Protect yourself online!
Indeed: Start hiring NOW with a SEVENTY-FIVE DOLLAR SPONSORED JOB CREDIT to upgrade your job post at Indeed.com/personalfinance
Monarch Money: Get an extended 30 day free trial at monarchmoney/pfp
Join the Newsletter Here:
Index Fund Pro:
Links Mentioned in This Episode:
William Bernstein
FREE GUIDES:
The Stairway to Wealth: The Order of Operations for your Money
How to Negotiate Your Salary
The 75 Day Money Challenge
Get out Of Debt Fast
Take the Money Personality Quiz
Connect With Andrew on Social Media:
Instagram:
Twitter:
TikTok:
Master Money Website: …(read more)
LEARN MORE ABOUT: IRA Accounts
CONVERTING IRA TO GOLD: Gold IRA Account
CONVERTING IRA TO SILVER: Silver IRA Account
REVEALED: Best Gold Backed IRA
Having an emergency fund is crucial for every individual’s financial well-being. It acts as a safety net during unexpected circumstances, such as medical emergencies, sudden job loss, or major car repairs. However, determining how much should be saved in your emergency fund can be a daunting task, as it varies depending on your financial situation. In this article, we will discuss how much you should ideally have saved in your emergency fund based on different financial scenarios.
1. Single Individual with Stable Employment:
If you are a single person with a steady income and few financial obligations, it is generally recommended to save three to six months’ worth of expenses in your emergency fund. This amount should cover your essential expenses like rent/mortgage, utilities, groceries, transportation, and insurance.
2. Single Individual with Unstable Employment:
If you are a freelancer, entrepreneur, or have a job that offers irregular income, it is advisable to save at least six to nine months’ worth of expenses in your emergency fund. The longer time frame accounts for the potential income fluctuations and gives you a safety net in case there are long gaps between jobs.
3. Dual-Income Household:
In a dual-income household, it is recommended to save three to six months’ worth of expenses jointly. However, if both partners work in the same industry or have a higher probability of job loss at the same time, it might be wise to save at least six to nine months’ worth of expenses. This ensures that you can sustain your lifestyle while searching for new employment.
4. Single Parent or Sole Breadwinner:
If you are a single parent or the sole breadwinner in your household, it is crucial to have a more robust emergency fund. Saving six to twelve months’ worth of expenses is advisable as it provides a safety net during unexpected emergencies, ensuring that your family’s basic needs are met in case of job loss or health issues.
5. High Debt Burden:
If you have significant outstanding debts, it is essential to prioritize both debt repayment and building your emergency fund. In this case, it may be wise to save three to six months’ worth of expenses while concurrently focusing on debt repayment. This helps maintain a balance between building financial security and tackling debt.
6. Self-Employed Individuals:
Self-employed individuals face greater uncertainty, making it important to save a larger emergency fund. Experts recommend saving nine to twelve months’ worth of expenses due to the inherent unpredictability of income streams. This fund will act as a buffer during lean periods when your business may face temporary setbacks.
It is important to remember that these guidelines serve as general recommendations. Everyone’s financial situation is unique, and you should make adjustments based on factors such as personal risk tolerance, stability of income, dependents, and other financial obligations. Analyze your circumstances and consult with a financial advisor if needed to determine the appropriate amount for your emergency fund.
In conclusion, having an emergency fund is an integral part of your financial wellbeing. By saving an adequate amount based on your specific situation, you can navigate unexpected situations with greater confidence and safeguard your financial stability during challenging times.
I like to set up my emergency fund with certain potential events in mind – basically my EM is set up with different buckets by priority. Bucket #1 (highest priority) hold enough money to pay all my deductibles. The important thing to remember on this is that for most deductibles is per instance and not per year (medical is probably the exception to that). If you have to tap into this bucket than my # 1 priority is to replenish it before doing anything else with my money. Bucket #2: Have enough cash on hand to pay 1-2 months living expenses. Bucket #3. 1-2 years worth living expenses set up in a CD ladder – this used to be 6-12 months but as I get closer to retirement age I want that to increase. if/when I do retire, this CD ladder will become my living fund and will get replenished using dividends or whatnot. That way I can potentially never sell investments when I retire. That is the goal at least 🙂