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Chapter 1: What is the importance of having an emergency fund?
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Oh, and what are you going to do when your financial shit hits the fan?
Well, Kate, I'm prepared because I have an emergency fund, which is what this episode is all about.
Yes.
Making sure you have money put aside that when all of that shit stuff in your life starts to happen, maybe you run your car into the side of the road, you need to see a sick family member, you're sick yourself, you're having a divorce, whatever happens, you've got some money so you don't have to go into debt to deal with these financial curveballs and you don't have to sell some of your investments, which we'll talk about later in this series.
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Chapter 2: How much money should you have in your emergency fund?
I personally, Kate, have never had to use my emergency fund. Touch wood. I'm guessing that I will need to use it sometime in my life, but I haven't had to use it yet. But I feel better knowing that it's there.
Yeah, absolutely. And that's the thing. You have to feel comfortable to use it if you do need to in an emergency. And also, you can replenish it. So if you do have a situation, you need to use a couple of thousand dollars to get that flight or leave a job or get you through, use that money and then think, okay, now I'm back into a stable position.
I can start saving up to replenish that emergency fund. So it's not something that once it's gone, it's gone forever. You can start building it back up again.
We've got actually an interesting community case study here from our RASC education site. And I might just read this out. It's from Emma who says, I was very grateful for my emergency fund when I was out of work for 10 months. I lived in the UK at the time and my mom and dad died about nine months earlier.
And I struggled every day going to a job I hated during that time and in the end decided to quit without having a new job lined up as I wanted to go home for a couple of months and spend some time with my family, which is totally fair.
I didn't think I would be out of work for so long but it was 2010 and London was still struggling with the fallout of the GFC so it took a long time for me to find my next job. Luckily I didn't need to move back to Australia as I wasn't quite ready to leave the UK yet and my emergency fund kept me going during that period.
So this is someone that's even overseas on holiday and they needed their emergency fund.
you know this is a person that by the sounds of it didn't need emergency fund to cover their mortgage or their maybe it was their rent in this case but you can see here this is a really visceral example of why the emergency fund matters and I mean of course she's also in Europe which is where Jason Bourne was when he went to Switzerland so we can forget about that but okay so
But it does, it gives you that sense of control over your finances. And even on the ladder to like feeling financially comfortable with yourself and where your finances are heading, having this emergency fund is really that first step.
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Chapter 3: Where should you keep your emergency fund?
Yeah.
So after listening to today's podcast, I think it's really important if you just take five, 10 minutes writing down some sort of plan of how much you might want on your emergency fund, how much you currently have, how much you need to save to get to that point and creating a savings plan that works with your budget, as we mentioned in the prior episode to get there, and then just creating a separate savings account and labeling it emergency fund or go bag or whatever cool term you want to call it.
yep great and if you've been with us for a while and you do have some money put aside what i would urge you to do is to run through a few scenarios and ask yourself do i have enough put aside for x y and z do i have enough for you know a loss of job for an injury for illness for a family member going down for a car breaking down do i actually have enough take stock of that right now
Also, review your insurances, which we'll get to in an upcoming Starter Pack episode, because you may find that over the last few years, you have become closer to retirement, your expenses have increased because of kids. Whatever the situation, you might have a bigger mortgage. Just do that review, check in on it, and that's your action point for today.
So Kate, some wonderful resources to accompany this episode. People, you can all go straight into the show notes and you'll find the resources that we've put together for you there, including some case studies, which are really valuable, like the one that I read out. So Kate, as always, it's always fun to talk emergency funds.
Yeah, I think it's such an important topic and I will talk about this forever because there's always someone else that needs to hear this and put one into place or even share this message with their friends and family.
Yep, indeed there is. So thank you for being with me for this episode and thank you listeners and viewers for taking part in this episode on emergency funds.
Bye. Bye. Bye.
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