FINANCIAL JOY 2.0: YOLO YOUR FINANCE by Sean Seah

Author:Sean Seah [Seah, Sean]
Language: eng
Format: epub
Published: 2019-07-15T16:00:00+00:00

meet an emergency situation. This means that most people do not have liquid savings (that is, immediately spendable funds) of at least $5,000.

The recommended amount for an emergency fund is three to six months of living

expenses. I say make it specific and aim for six months. Six months of living

expenses will be a full emergency fund.

Important Principles

Here are three important principles with regard to our baby emergency fund. They

will also apply to our full emergency fund, which we will go through later.

1. It is not an investment fund.

This is not an investment fund – it is not meant to grow. It is meant to be there so that you can use it whenever you meet an unforeseen financial circumstance.

2. It must be liquid and accessible.

You need to place this emergency fund into a vehicle that you can easily retrieve. For instance, do not put it into real estate, where you may need a few months to retrieve it.

3. It should be kept out of sight, but not out of reach.

While this emergency fund is accessible, keep it out of sight! It should not be

conveniently placed beside your (metaphorical) ‘door’, where you will be tempted to use it to pay for ‘pizza’. My suggestion is to keep it in a separate bank account; this is what my wife and I do. We have opened a monthly savings account to build up this

emergency fund.

Now that we have identified the baby emergency fund to be the 3rd Checkpoint in our Financial Joy I.D.E.A.L Roadmap, we will start to examine the expense sheet which

you completed earlier. Where are the money seeds you need to start funding this first milestone?

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