The Financial Therapy Podcast - It's Not Just About The Money
#3 – Emotions and Your Emergency Fund
Episode guests
Podcast summary created with Snipd AI
Quick takeaways
- Having an emergency fund serves two purposes: covering big expenses with uncertain timing and addressing unforeseen emergencies like job loss or medical costs.
- When creating an emergency fund, it is important to acknowledge and address the conflicting viewpoints and concerns within oneself while finding a compromise that suits different arguments.
Deep dives
The Importance of Having an Emergency Fund
Many Americans have learned the importance of having an emergency fund, particularly after the challenges of 2020. However, despite the knowledge, a significant percentage of Americans still do not have one. An emergency fund serves two purposes: to cover big expenses that are unavoidable but have uncertain timing, such as medical deductibles, home maintenance, or vacations; and to address unforeseen emergencies like job loss or large medical costs. While many people understand the need for an emergency fund, the lack of action can be attributed to various factors, such as barely covering essential expenses or associating the word 'should' with obligation, correctness, criticism, and shame. Taking a different approach by focusing on readiness, confidence, and importance (using the word 'will') can enhance the likelihood of establishing an emergency fund.
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