A: With every client that I work with, we like to do a financial profile to see where they are at now and what do we need to do to get them to their goals. One of the questions that comes up is how much money should I keep in an emergency fund.
Many financial professionals suggest that you put away three to six months’ worth of living expenses for emergencies. I try to encourage are clients to keep at least 6 months of income in liquid accounts. If you lose your job, or become disabled and don’t have adequate disability insurance, you’ll need that money to pay your regular monthly expenses, such as mortgage payments, insurance premiums, groceries, and car payments, until you can find another job. Without such an emergency fund, a period of unemployment could put your assets at risk. Similarly, if your car breaks down or your spouse has a medical emergency, you’ll want to have the necessary cash to pay the bills. You don’t want to be faced with an immediate need for cash, only to discover that you don’t have any.
You may have already set up an emergency fund. Did you put the cash in a five-year certificate of deposit (CD) or other long-term investment? In an emergency, you will need to get at those funds immediately. You can certainly pull your money out of the CD early, but you’ll pay a penalty. It’s better to keep some funds more liquid, in a traditional savings account, a money market deposit account, or a six-month CD, for example. That way, the cash will be readily available when you need it.
Finally, keep your emergency fund separate from your everyday accounts. You might even want to use a different bank. Unless you are extremely disciplined, you’ll be tempted to spend those extra funds if you keep them in your checking account. Remember, if you can put off an expense until next week, it is probably not an emergency.
Keeping at least 6 months of income liquid is always a good idea and a goal that you should diligently work towards.
Until next week!
About the Author
John R. Bearss is a retirement specialist. He has been successfully helping clients nearing retirement generate lifetime income streams for 25 years.
Disclaimer: Investing involves risk. Always do your own due diligence and consult a trusted financial professional before making any investing or financial decisions. John Bearss is a retirement specialist. He is also a registered representative of and offers securities through SICOR Securities, Inc., Member FINRA, MSRB, SIPC, 6500 Poe Avenue, Suite 105, Dayton, OH 45414 | (937) 890.3101. Neither SICOR Securities, Inc., Lifetime Decisions Management nor their representatives provide legal or tax advice. Please consult your CPA or qualified tax advisor before making any decisions. Lifetime Decisions Management, Inc. and SICOR Securities, Inc. are not affiliated.
PRAISE FOR JERRY 'S BOOK "Jerry Robinson does an excellent job of explaining the 'Petrodollar' system. His book explains exactly how this will come about, but equally important is the comprehensive section on what you can do to protect yourself."
(Recorded on 2/18/25) Module 3 is all about technical indicators and stock selection. We explore three go-to indicators that can give you an edge in your swing trading, and a step-by-step process to choose quality stocks to trade. Plus, we just issued these 14 new ETF...
(Recorded on 2/11/25) In Module 2, dive deeper into swing trading with moving averages and trendlines, learning the four key moving averages, and understanding how market trends and cycles guide effective swing trading strategies. Plus, gold reaches new heights and a...
Segment 1: Trump’s Tariff Chaos SEGMENT BEGINS AT 02:35 Host Jerry Robinson unpacks the latest tariff rollercoaster—who’s impacted, how markets are reacting, and what comes next. Topics include: Jerry explains the past week’s tariff timeline and key events How...
Please help us spread the word about FollowtheMoney.com on Facebook, Twitter, and any other social media outlets.
Silver & Gold
Call 800-247-2812 now for the best prices on gold and silver coins and receive Free Shipping and Insurance when you mention Follow the Money.
Weekly Newsletter
Stay in the loop!
Sign up today to receive our weekly e-newsletter.