Good Financial Reads: Emergency Fund Advice

We are all pretty aware and have talked before about keeping 3-6 months of living expenses in an emergency fund.  Maybe you already have this emergency fund or you’re on your way to actually getting that fully funded. But, with this 3-6 months of cash no one gets excited to just leave that sitting in cash.  Today, I want to talk you through some common places where you can park these emergency funds. 

Because we never know what the market will do in the short-term, we should not have any money invested that we plan to spend in the next 5 years. This means if we consider all future income and future expenses and we find that in some years we’ll need to pull funds from savings to buy the things we want, then we need that cash on the sidelines away from risk until we spend it.

You’ve probably heard this one before, but let’s bring some reality to the topic of creating an emergency fund.

An emergency fund is simply a pile of cash that we keep safe and available in case we need it.

Think of what a true financial emergency would be for you and make this something that is probable, not simply possible. If we try to plan for everything that is possible, we will quickly become paralyzed and unable to do anything. Instead, we focus on the probable.