Oct 26, 2021
On this episode of Financially
Naked: Stories from The Financial Gym, we are sitting down to talk
all about using your emergency fund! Today, the show is hosted by
two of our financial trainers. Victoria Sechrist, a Boston-based
trainer, is joined by Bevin Morgan, who lives in Lexington,
Kentucky.
Podcast Notes
- What is an emergency fund? It is an important savings goal for all of our clients!
- It is the strong foundation that acts as the base for the rest of your financial house.
- Depending on your employment and other circumstances, we recommend having anywhere between 3-12 months in expenses saved.
- For most people, this should be in a High-Yield Savings Account. It should not be in stocks, bonds, or other assets. Here’s a link to B.F.F. Approved High-Yield Savings Accounts
ONCE YOU’VE REACHED THE GOAL
- Reaching the goal number, especially for the first time, is very exciting for our clients.
- Sometimes when an emergency pops up and it’s time to use the money, people are hesitant.
- Bevin’s response to this is simple and consistent: “That’s what it’s there for.”
- All of the hard work and saving was in preparation for this exact moment.
- Instead of having to lean on a credit card or loan, the money is there.
- This mindset shift takes time. Saving is hard work. It can feel frustrating to use that money.
- Some people feel like they won’t be able to save that money again, which is understandable.
But you CAN. You’ve already flexed that savings muscle and were ready at the moment for that emergency. You can and will be able to save again using those savings muscles you’ve built over time.
- Victoria and Bevin both express how being prepared with an emergency fund, even if you’re not all the way to your goal, is a HUGE victory.
- You don’t have to worry about how you are going to pay because you already know.
GETTING STARTED
- Everyone’s journey to the emergency fund is different.
- When it comes to getting started, it can be challenging for some to make the leap into opening a high-yield savings account.
- Some clients struggle not having all of the money in one place and keep everything in one checking account. The added account can feel like an uncomfortable buffer or barrier
- Think about your finances as a house. All of your money is one house and each account is a different room. Having a high-yield savings account is simply having your money in a different room, but it is all in your house.
- Clients at the gym usually start working with us when they want to make a change and that means there is some sacrifice involved. This doesn’t mean you have to swing into the extreme or live in scarcity. We don’t want the process of getting financially fit to include giving up everything you love.
- Life is meant to be lived in every single moment. We want to make sure there are resources for the future-you, but also ensure the present-you is taken care of. When starting a savings journey, an important step is figuring out the non-negotiables.
- Our tagline at The Financial Gym is “What are you working for?”
- Get into the details of other fixed expenses and other recurring monthly charges and see where you can start shaving. Those small savings add up monthly.
THE JOURNEY ISN’T ALWAYS LINEAR
- Sometimes on the way to building a $10,000 emergency fund, a $5,000 unexpected expense happens.
- This can be discouraging, but remember, it is still a HUGE victory.
- You had the money, did not have to take out debt, and were prepared.
- You’ve been building that savings muscle and will build that fund again.
- Once you see what you’re truly capable of,
there is no holding you back!
USING YOUR E-FUND FOR NON-EMERGENCIES
- Interesting client question. What do you say to a client who might want to use a chunk of emergency savings to buy tickets to a once-in-a-lifetime BTS concert?
- Our mission is to help clients achieve their goals - so if this is really something they want and it’s not an every week ‘once-in-a-lifetime concert’ pattern, there are intentional options! Our goal at the gym is to help clients live their best lives by budgeting and planning for these things!
- That being said, sometimes there are once-in-a-lifetime opportunities and there are always options to make it happen. Life is short. Money is a tool to help us live a wonderful life.
- Talking about money should be fun! Everyone’s
situation is so personal, which is what is so special about the
relationships clients and trainers have.
LEARN MORE ABOUT EMERGENCY FUNDS ON OUR
BLOG:
How
to Save Your First $1,000 in Emergency Savings
How
to Build an Emergency Fund & Why You Need
One
Meet The Trainers