Emergency Funds 101: You’re Screwed If You Don’t Have One — Transcript

Full transcript

1. 0:00[Music]
2. 0:05back when I was broke every emergency
3. 0:07was a full-blown crisis everybody
4. 0:10Panic if I cracked a tooth on a Nature
5. 0:13Valley bar if the AC went out mid July
6. 0:15if my car started making humpback whale
7. 0:17sounds I was in trouble because I had no
8. 0:19Financial cushion between me and life
9. 0:22it's like when you get in trouble in
10. 0:23youth group because you failed to leave
11. 0:25room for Jesus just traumatic in
12. 0:27different ways leave room for Jesus
13. 0:31but when I decided to get control of my
14. 0:32money one of the first things I did was
15. 0:34build an emergency fund for when the
16. 0:36unexpected happens and now I get a lot
17. 0:38of questions from you guys about
18. 0:39emergency funds how much should you save
19. 0:41where should you keep it and what even
20. 0:43qualifies as an emergency the Taylor
21. 0:45Swift 1989 re-release on vinyl not an
22. 0:48emergency but I will be buying it with
23. 0:50no shame George's version So today we're
24. 0:53going to go over what you need to know
25. 0:55when it comes to protecting yourself
26. 0:56with an emergency fund but first
27. 0:58emergency this is is not a drill like
28. 1:01subscribe and share immediately
29. 1:03emergency this is not a drill like
30. 1:06subscribe and share immediately you
31. 1:08heard the man do what he says all right
32. 1:11I'm sure you're all aware of Murphy's
33. 1:12Law anything that can go wrong will go
34. 1:15wrong and don't forget about his brother
35. 1:17Cole known for Cole's law Cole's law you
36. 1:20know what not a fan of either you see if
37. 1:23you don't have an emergency fund Murphy
38. 1:25is going to move in with you full-time
39. 1:27watch Narcos in the back room and finish
40. 1:28off your leftover piz faster than you
41. 1:30can say cauliflower cheese stuff crust
42. 1:32that's why you need to have money in the
43. 1:33bank to cover emergencies otherwise
44. 1:36you're going to turn to credit cards
45. 1:37borrow from your 401k take out a HELOC
46. 1:40or any other dumb things that will keep
47. 1:41you stuck in debt and prevent you from
48. 1:43getting ahead with money now before we
49. 1:45go on little PSA here if you have
50. 1:47Consumer Debt your focus shouldn't be
51. 1:49piling up a huge emergency fund yet your
52. 1:52focus should be on getting out of debt
53. 1:53like your life depends on it so if
54. 1:55that's you the first thing you should do
55. 1:56right now after liking and subscribing
56. 1:58obviously is to save up a $1,000 starter
57. 2:01emergency fund for some of you saving
58. 2:031,000 bucks may feel impossible maybe
59. 2:05you've never even had that much money in
60. 2:07your bank account at one time but I
61. 2:08promise if you're intentional with your
62. 2:09budget sell some stuff do some side
63. 2:12hustles cancel some subscriptions you
64. 2:14could have that $1,000 and under a month
65. 2:16now for the rest of you you're thinking
66. 2:18$1,000 that's nowhere near enough for an
67. 2:20emergency fund to which I say I know
68. 2:23that's why I said starter it's not
69. 2:25supposed to be enough it's just supposed
70. 2:27to keep you afloat while you put the
71. 2:29rest of your time energy resources and
72. 2:31money toward getting out of debt and I
73. 2:33want to see some intensity here I want
74. 2:34to see some passion I want you coming in
75. 2:36like a wrecking ball people more passion
76. 2:38more passion more energy then once the
77. 2:40debts gone you graduate from a starter
78. 2:43to a big boy fully funded emergency fund
79. 2:45I'm talking 3 to 6 months of expenses
80. 2:47saved which should be enough to protect
81. 2:49you from falling back into the debt
82. 2:51cycle when emergencies do happen but
83. 2:53just how much as 3 to 6 months of
84. 2:54expenses well start by looking at your
85. 2:56bank account and budget to see what it
86. 2:58takes to operate your house household
87. 3:00for a given month and you're going to
88. 3:01want to account for a bit more than the
89. 3:03minimum food utilities housing and
90. 3:05transportation but maybe we don't
91. 3:06include all the luxuries like Fridays at
92. 3:08Applebee's or your weekly bassoon
93. 3:10lessons that way if you lose your job
94. 3:12because your undocumented evil twin
95. 3:14shows up locks you in the trunk of your
96. 3:15car and starts vandalizing your office
97. 3:17supply room after pretending to be you
98. 3:19you can live off your emergency fund for
99. 3:20a couple of months very specific
100. 3:22reference but it could happen I'm just
101. 3:26saying you'll just want to get on a
102. 3:28barebones budget that just covers the
103. 3:30essentials so you can pay your bills put
104. 3:32food on the table and fill up the gas
105. 3:33tank now once you know how much it takes
106. 3:35to operate your household for 1 month
107. 3:37let's say for your family that's $5,000
108. 3:40multiply it by three or six to get an
109. 3:42idea of how much you should save so in
110. 3:44this case that would be around $15 or
111. 3:46$30,000 yeah I mastered my
112. 3:48multiplication tables in fourth grade 9
113. 3:50*
114. 3:557 63 edit the breakout later guys thank
115. 3:58you no no I don't think I will quick
116. 4:02side note I cover how to save up this
117. 4:04amount and More in chapter 12 of my new
118. 4:06book Breaking Free from broke if you
119. 4:08want to check that out I'll drop a link
120. 4:10below so you can pre-order and get a
121. 4:11whole bunch of goodies when you do so
122. 4:13next question how do you know if you
123. 4:15should save up 3 months or 6 months of
124. 4:17expenses great question faroo thank you
125. 4:19for that love when you throw those fast
126. 4:21balls so here's my rule of thumb save 6
127. 4:23months of expenses if you fall into any
128. 4:25of these categories you're married with
129. 4:27one income you're a single parent you're
130. 4:29selfy employed you have a regular income
131. 4:31like commission or seasonal jobs or you
132. 4:33or someone in your home has chronic
133. 4:35health issues save at least 3 months of
134. 4:37expenses if you fall into either of
135. 4:38these categories you're single with no
136. 4:40dependence and a stable income or you're
137. 4:43married with two stable incomes so let's
138. 4:45get tactical if you're a single fireman
139. 4:47with no dependence 3 months is fine and
140. 4:50also if you're a single fireman with no
141. 4:52dependence comment below on this video
142. 4:53I've got a friend you'd be great with
143. 4:55and if you're a stay-at-home parent
144. 4:56whose spouse recently quit their
145. 4:57corporate job to be their own boss and
146. 4:59sell supplements through a commission
147. 5:01based business model you'll want to have
148. 5:036 months and you also might want to
149. 5:05investigate further this has Lula Rich
150. 5:07written all over it but really 3 or 6
151. 5:09months you get to decide just make sure
152. 5:11it will give you security and if you're
153. 5:13married make sure you agree on that
154. 5:15number you can fight about Ted lasso
155. 5:17series finale you can fight about pizza
156. 5:19toppings but for this one be of one
157. 5:21Accord now you don't need to have a year
158. 5:23of your salary in an emergency fund
159. 5:25that's Overkill so just have a heart-to-
160. 5:27heart with your prepper husband show him
161. 5:28this video tell them 6- month savings is
162. 5:30fine and while you're at it ask him to
163. 5:32reflect on the number of canned beans
164. 5:34stashed in the coat closet there are
165. 5:35Pinos in the peac coat it has gone too
166. 5:37far Brad which brings us to where you
167. 5:39should be keeping your emergency fund
168. 5:41some ideas include under your doorm in
169. 5:44your glove compartment inside the cookie
170. 5:45jar but if those ideas feel unsafe to
171. 5:48you I agree don't do that there are
172. 5:50other options I personally prefer like a
173. 5:53simple savings account connected to your
174. 5:54checking account a money market account
175. 5:56that comes with a debit card or check
176. 5:58writing privileges and and my personal
177. 6:00favorite an online high yield savings
178. 6:02account that pays a higher interest rate
179. 6:04while still giving you easy access to
180. 6:05your money when you need it PS I did a
181. 6:07whole videos on the worst place to store
182. 6:09your savings and the best places and I
183. 6:11will link that below if you want to
184. 6:12watch it the main point to remember here
185. 6:14is to make sure your emergency fund is
186. 6:16liquid which is why your glove
187. 6:17compartment wouldn't be an ideal place
188. 6:19to keep it that's a sticky mess waiting
189. 6:20to happen # grow Now by liquid here's
190. 6:25what I actually mean it means you can
191. 6:26get to it easily and quickly even if
192. 6:29your money can earn more interest if it
193. 6:30were invested earning interest is not
194. 6:32the point of an emergency fund this
195. 6:35emergency fund is Insurance not an
196. 6:37investment the point is to be able to
197. 6:38pay that doctor or mechanic quickly with
198. 6:40zero Hassle and zero headaches on the
199. 6:43flip side you don't want the money so
200. 6:44easy to get to that you're dipping into
201. 6:46it for every little reason so that's why
202. 6:48I love a high yield savings account it's
203. 6:49not attached to checking and you can
204. 6:51typically access your money faster than
205. 6:52Amazon Prime can mail you a mullet wig
206. 6:55oh never mind they'll have it to me by
207. 6:574:00 a.m. I take it back dang they're
208. 6:59good with that overnight
209. 7:03delivery next question how do you know
210. 7:05when it's really time to tap into your
211. 7:07emergency fund well start by looking at
212. 7:10your budget ask yourself can you simply
213. 7:12adjust the budget this month to cover
214. 7:13the expense you know wait until next
215. 7:15month to take the family shoe shopping
216. 7:17or postpone the trip to Branson or just
217. 7:19cancel it all together no shade to
218. 7:21Branson but it's basically Great Value
219. 7:22Vegas fried and butter I said what I
220. 7:25said he's not wrong you see skipping
221. 7:27some extras for a few weeks to avoid
222. 7:29dipping into savings is totally worth it
223. 7:31because remember once you spend from the
224. 7:33emergency fund you have to rebuild the
225. 7:35emergency fund really quickly and if
226. 7:37you've done the math and moving things
227. 7:39around in this month's budget isn't
228. 7:40going to cut it ask yourself these three
229. 7:42questions is it unexpected is it
230. 7:45necessary and is it urgent if you can
231. 7:47answer yes to all three of those you've
232. 7:49got a real emergency on your hands and a
233. 7:51real need to use the emergency fund and
234. 7:53use common sense here even if it feels
235. 7:55like it your friend's last minute
236. 7:57Bachelor trip to Pensacola Beach is not
237. 7:59enough emergency and I know you don't
238. 8:00want to miss the dolphin cruise but
239. 8:02there'll be another one you don't know
240. 8:04that you don't know that and when it
241. 8:06comes to actually building your fully
242. 8:07funded emergency fund it's easy to get
243. 8:09discouraged because there's no immediate
244. 8:11reward I mean truthfully saving isn't as
245. 8:13much fun as the other things you can do
246. 8:15with money like spend it or give it but
247. 8:17if you put your mind to it most people
248. 8:19can knock out this step in 6 months or
249. 8:21less plus it's a huge financial and
250. 8:23emotional step because funny enough when
251. 8:26you have an emergency fund you sort of
252. 8:28quit having Financial emergencies they
253. 8:30simply turn into inconveniences you see
254. 8:32when you're broke you never seem to have
255. 8:34good luck and when you're not broke you
256. 8:36seem to have more good luck but really
257. 8:38it's not luck you've just set yourself
258. 8:40up to be in a better position to afford
259. 8:42higher quality items do the right
260. 8:43maintenance and have margin the real key
261. 8:46to this whole emergency fund thing is
262. 8:48you have to make it a priority I mean if
263. 8:50your fantasy team Sherlock Mahomes
264. 8:52matters more to you than Financial
265. 8:53Security you're never going to have it
266. 8:55so get your mind right and get this in
267. 8:57place ASAP then when you have that extra
268. 8:59padding you'll have a true taste a
269. 9:01financial piece kind of a warm Bold
270. 9:03Flavor with hints of freedom and vibrant
271. 9:05notes of cash flow at vacations that's
272. 9:08nice that's a
273. 9:0910 plus there will be no reason to keep
274. 9:12around debt or credit cards anymore
275. 9:13because you're funding yourself that's
276. 9:15right I said it Go fund yourself mom if
277. 9:18you're watching I didn't actually cuss
278. 9:21okay don't call me upset now if you
279. 9:23don't have an emergency fund yet or
280. 9:25you're realizing right now that yours
281. 9:26isn't big enough it's time to start
282. 9:28saving and making a budget is the first
283. 9:30step to get there now I personally use
284. 9:32the every dooll budgeting app because it
285. 9:34makes it super easy to see where your
286. 9:35money is going and make a plan plus on
287. 9:38average firsttime every dollar budgeters
288. 9:40immediately find an extra 332 bucks in
289. 9:43their budget and cut their monthly
290. 9:44expenses by 9% with that you'll be
291. 9:47building your emergency fund in no time
292. 9:49so if you want to check out every dollar
293. 9:50I will link it below oh and I'd love to
294. 9:52know in the comments what your last
295. 9:53emergency was and how much it cost you
296. 9:56and more importantly did you have the
297. 9:58savings to cover it as always share this
298. 10:00video with a friend who needs to
299. 10:01reexamine their definition of emergency
300. 10:04Farooq the Joe Bros tour is not an
301. 10:06emergency Don't make me say it a third
302. 10:08time plus Joe's kind of phoning it in on
303. 10:10stage man he's going through a lot let's
304. 10:12wait till the next tour thanks for
305. 10:13watching we'll see you next time