Nearly half of Americans wouldn’t be able to easily handle a $400 emergency! This is financial insanity. Considering the lack of any sort of margin in our lives today, it’s no surprise that Americans treat their money the same way they treat their time. There just never seems to be enough, and any disruption (of money or time) brings a myriad of problems. Living paycheck to paycheck has unfortunately become the norm and it’s a problem that needs to be addressed.
The answer is to create an emergency fund! Having an emergency fund allows us to weather these small storms, and most importantly reduces stress. In this episode we discuss what an emergency fund is, what it is for (and not for), and how to get started on your own- including where to put that money! Listen to the entire episode to learn what steps you can take today, regardless of your financial situation.
Extra credit: it’s a long read, but here’s an article that inspired us to talk about emergency funds: The Secret Shame of Middle-Class Americans.
At the beginning of this episode we each cracked open and enjoyed a beer called Liliko’i Kepolo by Avery Brewing, a Belgian-style white ale which you can learn all about on Untappd. If you enjoyed this episode, be sure to subscribe and review us in Apple Podcasts, Castbox, or wherever you get your podcasts!
Cheers!
Hey guys – love the podcast! My wife and I have a slightly different strategy in regards to our emergency fund. Because we want as much of our money making more money (investments), we only keep around $5k in a bank account. We have a HELOC set up that we can tap quickly if something were to come up. Also, could tap our Roths like you had mentioned. We have 2 good incomes, 2 rental properties, and a modest lifestyle so even a $3-5k “emergency” isn’t that much of a big deal as it is for others. Keep the beers flowing! Cheers!
Nate- right on!!! Joel and I both lean more towards your approach than we let on during the podcast, but we’re thinking there are a lot of listeners out there who need that first step to be simple and straightforward. My wife and I keep ours a little more beefed up since our income fluctuates and we sometimes use our emergency fund to level out the peaks and valleys.
But I completely agree with the general strategy behind your approach- trying to put as much money to work, while still being accessible! Cheers and thanks for listening!
Hey Nate,
That’s a great strategy. I’ve done something similar for quite a few years now. It’s definitely a bit more of an advanced strategy but it is something we should have mentioned. Since we brought up the Roth, which is also a more advanced strategy, we should have brought up the potential of using a HELOC as well. It’s definitely a tricky one bc I don’t want to give people that just can’t get around to saving any money a green light to take on debt as their only source of an emergency fund. But the way you handle it is absolutely fantastic and something that we should have attempted to discuss. Thanks for the feedback!
Hey y’all, I have recently started listening to the podcast and absolutely enjoy it. I started making a serious financial turnaround about 6 months ago. That is when I started my emergency fund through a good savings app called Albert and it uses that method of auto-saving so I do not have to really think about it. It has definitely gave me a good running start towards having the recommended 6 months of spending saved up but still have a ways to go. I plan on continuing to utilize this app to help reach that important benchmark, but would you recommend something to speed up the process?
Cheers