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