Most people who have read any financial planning books or magazine articles are familiar with the idea of an Emergency Fund.
An emergency fund is where you accumulate an amount of money in your bank account so that if you face a sudden job loss, short-term disability or other financial catastrophe, you will have the money to tide you over until you are back on your feet.
The recommended size of the fund is to start with at least one months living expenses, and increase that as quickly as possible to 6 months… and keep it in a fairly accessible place (not locked up in a 10 year CD for example)…
It is a good idea to have savings to self-insure against “normal” personal financial crises, but this is not enough. An emergency fund doesn’t protect you from a loss of electricity, grocery stores shut down, and potentially hungry looters…
In the next few posts, we’ll discuss this further…
{ 16 comments… read them below or add one }
Where should I keep my bug-in fund?
Clearly the banks aren’t to be relied on, and they’re never open when you need them!
http://www.martin-wright.com
“Where should I keep my bug-in fund?”
Great question and one that I’ll be answering in a future post…
You are right to be concerned about putting all of your trust in a bank. Even a safe deposit box is not a great idea for many purposes…
Rob
Setting up an emergency fund would be a great first step in emergency preparedness. For most people six months sounds like a lot of money, so they should start out with something more manageable like maybe one or two months. And a portion of this should always be in cash since in many emergencies there will be no power and the banks will be closed.
I’m looking forward to your future articles.
Steve Chambers, B2B Sale Trainer
You never know how long a financial crisis will last. Even if your starting with a small amount it’s important to start building it.
Jose Escalante
http://www.ChampionGreenEnergy.com
I think it’s great that you are suggesting this. Too many people are unprepared and are gonna be buggin out if anything goes wrong (more likely than not).
Keri
Anything Alternative
Stashing cash for the ol’ emergency fund. Sounds good.
Health, Fitness for Busy People — Darryl Pace
Currently accepting donations to Greg Dougall’s emergency fund here.
This is so true yet so many do not have emergengy funds.
Vicki http://www.bridalthreadshq.com
Oops, no, no emergency funds. Flying by the seat of my pants as usual.
Lisa McLellan
Babysitting Services – Babysitters and Nannies
Perfect info, especially in this economy.
Robert Martin
http://www.carbuyinghq.com
Do you think we are heading for the “black swan”? I have some funds but most are in the bank – not great if we a bank holiday!
stevebt.222@gmail.com
I reverted back to keeping my small business funds in an envelope because Chase bank bought my WAMU bank account and proceeded to take funds from one account for use with a Chase account that was in dispute…. No time for rainy day funds now.
Cleanse from the inside out, Katie
Hi Rob,
What or where isn the best place to invest in something with intrinsic value?
Bert
BusinessAndMarketingMakeover.com/blog
Bert, It depends on the situation. If you are worried about a natural disaster then having stores of food, water, and usable energy are critical in the short-term.
If you are worried about hyperinflation and or banking system collapse, then some form of precious metals should be in your portfolio.
We’ll be exploring these topics in greater depth in the months and years ahead…
Rob
Thanks Rob,
I’m looking forward to your future posts.
Bert
BusinessAndMarketingMakeover.com/blog
Robe great idea … the “rainy” days are here..
Scott
http://www.salesjunkie.net