If you’re interested in the Happy Finances Challenge, you’ll love The Happy Finances Challenge book. Get your copy here.
As you know an emergency fund is the money you squirrel away to keep you from making a financial inconvenience a financial catastrophe.
While a job loss is unfortunate, it doesn’t have to bury you financially if you’ve socked away enough to weather this financial storm.The best way to stay ready is to build a sexy, rainy day-proof emergency fund Click To Tweet
You know what they say, “You never have to get ready if you are always ready.”
The best way to stay ready is to build a sexy, rainy day-proof emergency fund. Here’s my 6:9:12 Emergency Money Rule to help you stay focused and targeted.
Six months of living expenses or net income: If you are living in an expensive city, this is a bare minimum to hold you over in the event of a job loss, a medical expense, or any other unforeseen emergency. Keeping this amount of money will keep you from relying on credit cards, which could transform a financial emergency into a financial disaster. In other words, this emergency fund saves you from going into debt.
Nine to twelve months of living expenses or net income: It would be wise to save this amount of cushion if you are self-employed, your income fluctuates (i.e. if you rely heavily on commissioned-based transactions), or if you work in a declining industry with lots of layoffs.
Twelve months of living expenses or net income: Save this amount of money if you earn $100,000 or more. There are fewer jobs offering this salary, so your job hunt may be longer than the typical candidate that is seeking positions for more modest salaries.
You also want to save this amount if your job is highly specialized as it may take more time to find a job in your field. Independent of job replacement, it would be ideal for you to save this amount in your emergency fund if you have dependents and children.
Now that you know the 6:9:12 Rule, share with us in The Happy Finances Community which of these are going to be your emergency fund goal. Label it: Day 18: My 6:9:12 goal!
That’s it for today’s lifework!
Also, leave a comment below with your “aha” moment or reach out to your accountability partner(s) for questions and insights.
Finally, hit me up and share your insights. I’m cheering you on.
The Happy Finances Challenge is 42 days of transforming how you “do” money and life. Get a copy of The Happy Finances Challenge book here today!
The Mama Bear Principle: Mama Bears are protective of their cubs and their crew. And that’s exactly how I feel about our community. Throughout the Happy Finances Challenge, I may recommend some products and service and receive some form of compensation. However, I would NEVER suggest them unless I truly believed they were useful or helpful.