Should You Have More Than a 3-6 Month Emergency Fund?

Should You Have More Than a 3-6 Month Emergency Fund?

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[HoustonTom]

54 year old here with a 12 month emergency fund. I’m looking to expand it to 36 months by the time I retire in my early 60s.

[wealthbytes]

I pushed to a minimum of a year in my emergency fund especially when going into a lot of uncertainty. The peace of mind is worth it

[nicholasmartinez]

I have a 6 month fund + a “five year fund” that could cover replacing two vehicles, a few family vacations and house renovations.

[jacobside]

I've said this on previous videos. After being out of work for nearly a year in 2010 I aim for having a year's worth of expenses in my emergency fund

[djpuplex]

6 months plus sinking funds. Alot of people forget about sinking funds.

[neverclevernorwitty]

Yah. My wife and I are 47, for the first time ever in my life we bought a CD and TBill equivalent. We've been saving for some upcoming short term goals and after investing in growth oriented vehicles for so long, we almost forgot about how much the rise in interest rates are really a sweet deal for short term saving.

[saulgoodman]

YES. 2020 showed us that we do.
I have about 75k in emergency funds.

[Phoenix]

My monthly expenses are about 2k a month, so 6k emergency fund seems pretty lean. But I have a 2 income household and my job is extremely reliable

[JakeSpradlin]

I think it also depends on if you are a homeowner, and the age of your home. I am a homeowner and my house was built in the early 70’s. I have a new water heater and a 2019 HVAC, but still keep about 6-7 months of expenses in my emergency fund because of unexpected repairs needed on my home. If I was a renter, I would only have 3 months of emergency fund

[ghjong]

I can find 6 month CDs at around 5% (it varies from day to day) on Fidelity. I've drawn my cash down to 3 months of reserves, and have started a short term CD ladder. The question for me is what the value of liquidity is.

[Tialian]

I'm in the same boat with the mortgage, was putting an extra 1k a month towards it (3.875% interest) but recently opened a new high yield account at 5% and shifted that extra payment there for the time being. My existing high yield is paying 3.75% which is still pretty good but wouldn't have made me stop the extra payment.

Regardless the plan was to write a check a year from now and pay off the mortgage, which I can still do if rates come back down, but might as well have my money work a little harder for me while savings rates are high.

[aaronliss]

I just read "The Two Income Trap" by Elizabeth Warren and her daughter and the thesis in the book is contrary to what Brian says. Brian says that two incomes are better than one, "One income is going to lend itself to higher cash reserves than two incomes...One of us loses their job, we'll just lean on the other one." The book outlines that this logic can be flawed if the family's lifestyle depends on both incomes. When one income is lost, they can no longer afford the necessities, ie mortgage/rent, child care, health insurance. His logic is sound if the family can afford to live on one income-- the other partner can go to work to bring in additional income while they supplement with their cash savings. I would say the advice is more nuanced and depends on the household income vs expenses. I think the 3-6 months savings should be based off total household expenses and should skew towards 6 months depending on the risks involved.

[TheFinanceEdition]

I'm thankful they changed the intro... it's kind of weird since they're cohosts lol.

[Red_]

If you’re a single person with children how much is the recommended emergency fund? I didn’t catch it.

[duneme]

If you have multiple Rental Houses (Paid for) and your typical Vacancy is 2-Weeks! So, you have multiple sources of income! You also get more than enough from Your Rentals to caver unemployment!

Can you trim down your Emergency Fund?

[danaabadal]

maybe someone could help me with this? so, if a retired couple has a small pension and social security that adds up to apx 80, 000, and they take 50, 000 a year from a brokerage link, inside of a 401k account, does that mean that they will be taxed on the 80, 000 at 12%, and then at 15% on the 50, 000 in the brokerage account?

[appleztooranges]

I think in 2024 you need at least $30, 000 + in emergency funds

[anniealexander]

Does it make sense to pay tax on earnings from 4% interest when you have a 3% mortgage? I would write a check for the mortgage and be done. Trust me, that money will quickly be saved again when a person is debt free.

Sunday, I had a friend say the same thing. He is earning interest and paying taxes on it while paying a mortgage. I JUST DON'T GET IT!!!!

I think cash makes people feel wealthier than they are in real life. My friend clings to his cash. I just live debt free. I probably feel poorer than I actually am. That feeling probably keeps me from spending as much money as I would with more cash. For instance, I ate a salad for lunch today that I prepared myself. I bet my friend hit a restaurant atleast once today.

[PeachFuzz]

Once you reach a certain level of wealth you no longer need an emergency fund.

[x]

I’m making $555 a month in interest from savings account.