How Much Emergency Funds Do You Need | BeatTheBush

An emergency fund is not just some random number that you are comfortable with. It is based on the average unemployment duration and also on your ability to find another job. The more secure you are the less of a fund you need. However, I still recommend to carry at least a 12 month emergency funds which basically includes all expenditures for a full year. I know this may not be possible for many but it’s something to work towards.

How’s it goin everybody doesn’t beat the bush today i’m going to talk about emergency funds and actually how much you need to keep in one the bureau of labor statistics says that the average unemployment is about three months now this is average some people is only going to be unemployed for one week or maybe none at all other people can be unemployed for maybe six

Months or nine months maybe two to three times the average now back in 2010 when there is a lot of unemployment the average duration of unemployment with actually six months this is average so some people might be out for a job for twelve months 16 months 18 months even so this gives you an idea of how much emergency fund you need to actually tide you over until you

Find your next job now to me should you only really save just three months just for the emergency fund so that you can tie yourself over just exactly just barely until you find your next job to me i feel like you really should be more secure than this maybe you should save up to two three times as much just to have a warm fuzzy feeling so that you can rest easy at

Night because imagine if you’re out of a job and you have three months of emergency savings every single day that goes by you see your savings go down a little bit more that is going to give you a lot of stress versus if you have a whole year of emergency savings that still won’t be too comfortable but a lot better than inching towards this three-month mark with

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Us that you actually need to figure out your burn rate everything that you spend in a single month while you’re working and possibly when you’re not working you might have extra expenditures let me just go through this list there might be some things that you have forgotten so maybe jot this down so that you can figure out what your burn rate is the biggest item is

Likely rent or mortgage and if you have a mortgage you have property tax an hoa property tax usually comes once a year but you want to divide this by 12 just to figure out what your average expenditure is per month you might have home repairs that you need to do you might be able to put it off but sometimes you may not i look at the give early cost of home repairs

And then divide that by 12 as well just to factor that in as well you have your regular maturity bills such as water trash gas and electric if you’re unemployed you might use more electric more water because you’re at home more often a cellphone fine you obviously have to add to your expenditures as well because every single month you do have to pay except for me i

Don’t pay for a cellphone plan i have pre-plan now not having a cellphone plant it’s useful for me and that i can reduce my expenditures therefore i can reduce my emergency savings if you’re interested in on how i get my free cell phone plan i have a video over here i’ll leave that over there internet you might have to pay for that car insurance if you have a car

Car repairs and maintenance you might want to add in the average monthly cost that you have to pay for that you have gas likely you can reduce this if you’re unemployed car payments you really should not have this because i prefer that everyone buys their own car in full if you can’t afford it buy a cheaper car i personally do not have one so that is knocked off

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As well no cell phone no car payment possible bridging of health insurance now at some point you’re not going to get health insurance anymore and you might have to pay for your own out of pocket and this may be quite costly so you need to factor that in when you add into your emergency fund travel clothes gadgets and restaurants you might be able to reduce these

Significantly because when you’re out of a job you’re likely not going to go travel and buy a bunch of new clothes buying bunch of new gadgets or even go out to restaurants as much therefore all of these might kind of offset the health insurance thing it really depends on your expenditure on all these items student loan credit card personal loan payments now these

Items are all debts and you’re really servicing the interest and a little bit of the principle on all these debts this is another reason i dislike all these debts because if you find yourself in an emergency situation where you’re out of a job then it makes your burn rank that much higher because oh my gosh you help student loan you have to pay for credit card

Personal loans all these payments that can add up to a lot and if you lose your job it can make you go insolvent much much quicker if your burn rate is that much higher so you can see that if you reduce your expenditure it makes you that much more secure if you ever find yourself out of a job so my proper recommendation for an emergency fund is roughly 12 months

Of expenditure not six months to twelve months but twelve months or more when you find yourself out of a job it’s likely going to be at the economic downturn therefore it’s going to be more than the three month average on top of that you can sort of gauge yourself and figure out how high in demand your type of jobs is in your industry if the type of job that you’re

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Working at is really high in demand you might only need to save at the average rather than two or three times as much like i’m recommended if you ask me personally i actually prefer two or more years of the emergency fund yes all of this is in cash it’s just sits there and it just gives me a personal fuzzy feeling and lets me sleep very very well at night this

Emergency fund is usually placed in a savings account and it’s not invested anywhere this is because you want to access the cash right away and you do not want to be able to sell at a loss maybe when there’s an economic downturn it’s going to go down in value and that’s when you really need the money and you do not want the value to go down yes it presents an

Opportunity cost loss but this is what you pay to have security basically i hope you enjoyed this video it gives you an idea of how much you actually have to save for don’t forget to give me a like on this video comment down below let me know how many months makes you comfortable in an emergency fund if you’re interested in supporting this channel don’t forget to

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How Much Emergency Funds Do You Need | BeatTheBush By BeatTheBush

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