Watch the video above and talk about it with a group or mentor. Learn more.
Once you get out of debt, it's time to build an emergency fund of 3-6 month's expenses.
Key Points:
- An emergency fund is money set aside for unexpected expenses. Everyone should have one because bad stuff happens when we least expect it.
- An emergency fund should only be used to pay for things that are unexpected, necessary, and urgent.
- A rule of thumb is to have 3-6 month’s expenses set aside in your emergency fund. If your work is stable and salaried, you probably can do with three months’ of funds. If you work hourly, on commission, or for some reason have erratic income, aim for six months’ of expenses.
- Generally, you should work to pay off your debt and keep a secure rainy day fund for when things go wrong.
Quote This:
An emergency fund turns a crisis into an inconvenience. -Dave Ramsey
Talk About It
- What is your initial reaction to this topic? What jumped out at you?
- What was the last “emergency” you had? How much did it cost to handle?
- What factors in your life determine how big your emergency fund is (or should be)?
- What would be some real consequences in your if you had an unexpected expense that exceeded your monthly income?
- Write a personal action step based on this conversation.
This topic is adapted from the Mike and Lauren YouTube channel.
