12 month Emergency Fund
Hey Hivers! Because of the havoc Covid-19 is causing throughout the world. I think its more important today and in the future to have a Emergency Fund, if shit should hit the fan again!
So, lets get started!
What is an Emergency Fund?
An Emergency Fund is a Fund where you saved a good chunk of money for bad times! Also known as a rainy day fund. (I do think a rainy day fund is different, more on that later) Tony Robbins says that an emergency fund is your total monthly living expenses times 6. Meaning, so you can live like you live currently for the next 6 months, if your income would stop coming in. So for me that would be 10K dkk(1451 usd) * 6 = 60k dkk(14510 usd).A rainy day fund is different to me. I see the rainy day fund as a fund to fund other upcoming or unforeseeable expensive, such a medical expenses or repairs, anything unforeseeable. * Jamming But depending on where you live in the world and how the situation currently is where you live, I would suggest to build a 12 month big emergency fund, just in case something wilder than Covid-19 happens. Maybe even have 50% of it as an emergency fund in the bank, but the rest of the 50% in cash, if something would happen. I don't know tho, I am just jamming ideas on how to survive the next pandemic financial-wise. Will the pandemic last for more than 12 months? Properly not, but it will still have an impact on the world for some time. Some countries have started to open up again slowly. In the Future I will be aiming for a 12 month emergency fund in the future starting today. It will take me a while, because I will still be investing and properly use some money on travel. I do think I will be able to make money in the future as I start my own coaching business, but I need to start the business first and be done with school first. After thats done, I can work on that business and take it to 6 figures a month as the first goal. That would I mean I could take out more money and build up my personal emergency fund faster, but that would also mean that I can make an emergency fund within the company which also could pay me my salary if we hit hardship in the world.
But when do you invest then? Thats up for the individual itself since its about risk-management.
You could build up a 12 month emerguency fund first and then invest, but you will miss out of some gains, capital or dividends depending on how long it takes you to build that fund.
I will say that you should invest if you need the money in less that 5 years.
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