Speaker 1: Welcome to Before Breakfast, a production of iHeartRadio. Good Morning,
Speaker 1: This is Laura. Welcome to the Before Breakfast podcast. Today's
Speaker 1: tip is about how to build up a small emergency
Speaker 1: fund quickly. When you have at least some money in
Speaker 1: the bank, you can be far more calm about life's problems.
Speaker 1: To help me with this tip, I invited Joel and
Speaker 1: Matt from the How to Money podcast to share some strategies.
Speaker 1: They're with me here now as they will be for
Speaker 1: a few episodes this week. So Joel and Matt please
Speaker 1: take it away well do.
Speaker 2: Thanks for having us Laura. And with a potential recession
Speaker 2: on the horizon, cash is most definitely not trash. Having
Speaker 2: money socked away in a save us account is massively
Speaker 2: important for financial emergencies that might come along. And if
Speaker 2: you had noticed, rates for savings have been moving up
Speaker 2: in a major way, thankfully, So how much should you
Speaker 2: have saved? What your initial savings goal? We would say
Speaker 2: should be to have two thousand, four hundred and sixty
Speaker 2: seven dollars on hand. And yes, I know that.
Speaker 3: Is oddly specific, Yeah it is, but there is actually
Speaker 3: a reason for that specificity. First, having a particular and
Speaker 3: peculiar number like that, like two four six seven, that
Speaker 3: sticks in your brain, right, it allows you to remember
Speaker 3: the goal that you're aiming for. But second, research economists
Speaker 3: they've found that just a couple of years back, that
Speaker 3: this is a magical number that allows folks to pay
Speaker 3: for almost any emergency that might pop up. It's sort
Speaker 3: of like a financial floor, if you want to think
Speaker 3: about it that way. Now, it's not going to pay
Speaker 3: for a brand new engine in your private jet, it's not.
Speaker 3: It may now you even pay for a new engine
Speaker 3: in just your your regular old suv. But it will
Speaker 3: provide enough financial margin to allow you to weather most
Speaker 3: money storms that that can and will come along.
Speaker 2: Yeah, it's also important to mention that not too many
Speaker 2: things should fall under the classification of emergency. Right. Holiday presidents,
Speaker 2: for instance, are not an emergency. You should be planning
Speaker 2: and saving throughout the year for those new tires. Same thing, Right,
Speaker 2: it shouldn't be shocking to you that those bald pieces
Speaker 2: of rubber that you're driving on every day need to
Speaker 2: be replaced. Saving up for those over time is going
Speaker 2: to alleviate any financial shock that you might experience. Home
Speaker 2: maintenance also, right, you might not know exactly what's coming
Speaker 2: down the pike. But you know, it's of course inevitable
Speaker 2: that you should be stocking away money in advance something's
Speaker 2: going to happen, and that way, you're only tapping your
Speaker 2: e fund for legit emergencies that really couldn't have been
Speaker 2: planned for ahead of timeAs right.
Speaker 3: And I mean the goal it should be to replenish
Speaker 3: it quickly after you use that emergency fund, after you
Speaker 3: tap it. The truth is that two four and sixty
Speaker 3: seven dollars like that is a great starting point, but ideally,
Speaker 3: like you want to have something more like three to
Speaker 3: six months worth of expenses on hand. My family, we
Speaker 3: personally like to air on the six months end of
Speaker 3: the spectrum. And where it is that you choose to
Speaker 3: stash this newly prized e fund that is worth briefly
Speaker 3: discussing as well. Online banks they typically offer the very
Speaker 3: best rates, the best customer service and user interface as well,
Speaker 3: and so with that in mind, we tend to dig
Speaker 3: c discover ally there are other great online banks as well,
Speaker 3: but it's just a good idea to do your banking
Speaker 3: at a place that values your business and.
Speaker 2: Treat you fairly. Yeah, and by the way, giving you
Speaker 2: a specifical affirm number to aim for is a good thing,
Speaker 2: But what if even getting to that point feels like
Speaker 2: a huge lift. We would say creating a plan to
Speaker 2: get there is crucial, breaking it down into smaller chunks.
Speaker 2: If you think about it like that, and maybe you
Speaker 2: de signed okay, I think it's going to take me
Speaker 2: a year to say about that kind of money, Well,
Speaker 2: you just need to find six dollars and seventy five
Speaker 2: cents each day to stock away. That makes it a
Speaker 2: little easier, and it might even help to create a
Speaker 2: visual aid to track your progress. Matt he mentioned ally
Speaker 2: as a bank worth considering, they've got a very cool
Speaker 2: savings bucket feature that might be a helpful mechanism for you.
Speaker 2: And another option, Acorns, is a cool app. They can
Speaker 2: help you save money without even thinking about it by
Speaker 2: rounding up your purchases. So we would say, pick the
Speaker 2: method that makes the most sense to you in order
Speaker 2: to reach that goal in the least amount of time.
Speaker 1: What great advice, Well, thank you Joel and Matt. Having
Speaker 1: a good emergency fund can be more doable than you think.
Speaker 1: For more great financial tips, please listen to Joel and
Speaker 1: Matt at the How to money podcast and in the meantime,
Speaker 1: this is Laura. Thanks for listening and here's to making
Speaker 1: the most of our time. Hey, everybody, I'd love to
Speaker 1: hear from it. You can send me your tips, your questions,
Speaker 1: or anything else. Just connect with me on Twitter, Facebook
Speaker 1: and Instagram at Before Breakfast Pod. That's b the number
Speaker 1: four than Breakfast pod. You can also shoot me an
Speaker 1: email at Before Breakfast Podcasts at iHeartMedia dot com that
Speaker 1: Before Breakfast is spilled out with all the letters. Thanks
Speaker 1: so much. Should I look forward to staying in touch.
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