Economic and financial circumstances can change in the blink of an eye. How can you be sure you have enough emergency savings to weather the storm? In this article, we’ll look at all the factors to make sure you’re prepared before you run into trouble.
According to a CNBC and Momentive survey, half of the Americans surveyed have no emergency savings at all. The same survey also found that 40% of those with exigency funds have less than $10K set aside.
As record-breaking inflation continues, those dollars are not going to get you as far as time goes on.
So What Can You Do?
Well, it makes sense that before you go after it, you should determine the amount of emergency savings you need to feel secure and prepared.
Ultimately, if you are even thinking about whether or not you have enough emergency savings, you aren’t there yet.
How to Calculate “Enough” Reserves
Most financial experts will tell you a rule of thumb is to have enough saved to be able to pay three-to-six months of expenses should an emergency situation arise.
The problem is that this old maxim doesn’t hold up well against today’s economic challenges. The housing crisis and pandemic have taught us all that much.
For this reason, in addition to having enough to cover your expenses, you should also consider these questions:
- Do you earn a salary or does your take-home pay fluctuate?
- Is all of your income earned or is some of it passive (unearned) income?
- What current expenses could you cut immediately in an emergency?
- Where can you cut spending now to save for the future?
After answering these questions, you will get a realistic picture of how much emergency savings you truly need. And more than likely, it’s more than you originally thought, which presents a new problem:
How can you get more money?
Emergency Savings and Financial Security
The fact of the matter is that if you’re focused on “emergency savings,” your mindset is in the wrong place when it comes to finances. Real financial stability and freedom means you are certain that you and your family would have enough to face any hardship.
The road to reaching that level of certainty is through investment in cash-flowing assets. (To learn how I do this with real estate, you can get my book, How To Create Wealth Investing In Real Estate FREE at grantcardone.com/freebooks/).
Ultimately, if you are even thinking about whether or not you have enough emergency savings, you aren’t there yet.
So stop thinking about saving. Earn more, put your money to work – and be great.
This content is intended to be used for educational and informational purposes only. Individual outcomes may vary. You should perform your own due diligence and seek the advice from a professional to verify any information on our website or materials that you are relying upon if you choose to make an investment or business decision.
