I’d like to continue this video series which is a Summer Financial To-Do List. Hopefully, this will be a helpful nudge to listeners to improve their finances this summer.
And today, I want to discuss Bolstering Your Emergency Fund: Tariffs and wars have been in the headlines nonstop over the past few months. The unfortunate consequence of these developments may lead to a temporarily slowing economy and perhaps job loss. Now may be a good time to ensure that you have an adequate emergency fund. A rule of thumb is 3 to 6 months’ worth of expenses, though you may consider keeping more money in cash depending on your situation. It’s hard to plan for unexpected job loss and prolonged unemployment, however, a robust emergency fund can significantly mitigate that risk.
Oftentimes, folks ask me where to “invest” their emergency fund. The truth is, the return on this money is not important. The key is having the money easily accessible and liquid for when you need it. That being said, a high yielding savings account and money market account are both smart options. If you are having trouble finding a suitable high yielding option for this cash, don’t sweat it. Keep the funds in your checking account and move on with life. You should look to other parts of your portfolio to build your wealth.