Inside Out Money
055. Our formula for how much to keep in your emergency fund
Apr 29, 2024
Financial expert Liz joins the podcast to discuss the importance of emergency funds, how much to keep in one, and where to store it. They provide a tool and formula to help listeners determine their ideal emergency fund size, emphasizing the need for discipline in using the fund only for true emergencies.
42:03
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Quick takeaways
- Having an emergency fund safeguards against unexpected expenses to maintain financial stability and prevent derailment of long-term goals.
- Calculating the size of an emergency fund involves considering monthly expenses and typically amounts to three to six months' worth, with adjustments based on individual circumstances.
Deep dives
Importance of Emergency Funds
Having an emergency fund is crucial to cover unexpected expenses like car repairs, medical bills, or home maintenance without derailing your financial goals. It serves as a financial buffer to prevent resorting to predatory lending or disrupting long-term plans.
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