Tag Archives: Emergency Fund

Mother Nature FLEXES her Muscles – High Deductible Pre-View – Friday

With a crew that absolutely loves the outdoors – beach, mountain, desert … heck they might even like a rainforest (never been with the whole gang.) Mother Nature has an influence on our lives.

Mother Nature FlexesHurricane -tropical-cyclone-63124__480

We wish the best for those in the mighty Mother’s path. With the most visible storm making landfall to our friends on the mid eastern coast line, and one of our far west states/islands are also dealing with her muscle flexing….

Safe wishes to all!

High Deductible Preview

Next week we continue our found series (PLUP, Emergency Fund-) with the last depending part, the High Deductible. Thanks for all the responses, we have greatly enjoyed sharing and will have full versions in the coming Q4 Newsletter.

Of course it’s a Tennis weekend, but long time followers will be surprised to know this weekend unusually includes little Brother in a Sunday match while older sister watches and gives important advice…..

Today is a Friday, enjoy your day and the weekend .. be safe and talk to you next week!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents

The Emergency Fund – Size, Location, Reason, Need

It is so simple of a concept, but one that is easy to fail. The general rule is to keep 3-6 months living expenses, somewhere available, for safety. Those early in their careers with less dependents and less overhead will find this very manageable. Those of us with a few chips in our armor from big recessions, life’s curve balls, and experience, may want this number to be higher. Whatever level makes “You Sleep Better” within reason of course, is likely a good level.

Reasons for a Higher LevelEmergendy - helicopter-615168__480

  • Possible Job Change – Need to be higher on emergency funds
  • New Family Member- Higher is better
  • New Home – Expect unforeseen expenses – they always occur (Has anyone ever built or bought a home in less time and for less money than they thought? Nope, it’s in our nature)
  • Salary Fluctuations i.e. Commissions – Error on the higher side of that emergency fund
  • Others dependent on you – Business owner, large family, solo income earners, college or wedding – A bit higher is better

Stability Reasons for a Normal/Lower Level

  • Dual Similar Incomes – Lower Emergency fund is ok
  • Very stable Job – Smaller side of the living expenses will work

Where to Invest ? Safety first

A long time friend always commented on the Mason Jar, full of money, buried in his back yard (an old depression era tale) – all kidding aside, your emergency fund should be bullet proof safe. While that has been hard over last decade, not earning much interest, now finally we can get a few percentage points on our Emergency Fund, but that is only to keep it from being lazy, it is not an investment and should not be put at risk by stretching for a return. No risking, it needs to be there when the sky is falling.

Big Benefits

The most obvious benefit to having a health Emergency fund is less stress. Financial issues are well known to be a couples top stresser and frequently relief is felt as the healthy emergency fund is completed, when no pressure was ever felt in the first place.

Have a Great “Healthy Level” Emergency fund day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents

How Much Should I Have In My Emergency Fund ?

A Scouts # 1 Motto “Be Prepared” is applicable to all of us, as a foundation of Financial Planning is to always have an emergency fund.  A solid emergency fund forms the foundation of a financial plan.

Just as our home is built on a strong foundation and hopefully withstand the storms of life, a good financial foundation starts with an Emergency fund.

So How Much Should I have in My Emergency Fund?

The absolute minimum is 3 months expenses and with today’s interesting environment, we would error on the side of a higher level of closer to six months if possible. It is safer to error on the high side rather than low.

So Where Do I put My Emergency Fund?

Short of a mattress (kidding of course) we suggest your emergency funds be very safe. Do not stretch for high returns on your safe money! Rates are low, but so is inflation.  Your emergency funds need to be there when, and if, there is an emergency, so again, do not stretch for returns.

Through the ins and outs of life there will be times when our emergency fund falls below our target zone, that is ok, and expected. Do not worry, but keep your eye on the appropriate level, and try to get your funds back to the appropriate level as soon as possible. In times of stress, a healthy size emergency fund may keep one area of stress a bit lower.

Have a Good Day!

JK