Building an Emergency Fund in a Cost of Living Crisis | Episode 522

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Cheques and Balances 16 min 2 speakers 8 chapters transcribed 1 month ago
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What is an emergency fund and why is it essential during a cost‑of‑living crisis?

James (Host - Lighthouse Financial Advisor) 0:00
We are back in your life and today it is the best month of the year. It is not Michael's birth month, which is of course the 23rd of February is Michael's birthday. It is Money Month. We are here to break down the theme of Money Month, which is emergency funds. So Michael, emergency
Matt Harris 0:25
funds. Not the most sexy. Would that make me a Pisces if my birthday was the twenty third? It would I I wouldn't mind being a Pisces. Apparently
James (Host - Lighthouse Financial Advisor) 0:32
Leos have birth weeks, I've been told. It is the um time of birth we um of Leo. What time of the year is a Leo?
Matt Harris 0:39
Now. Really? What are you? What are you? I don't know. Bullshit. June? No. What star sign are you? Yeah, I don't know. You know what star sign you are. I don't know what star sign you are. You know what star sign you are. You're Sagittarius, aren't you? Uh I don't know. June 7th. I'm a Gemini. Gemini. Oh, you're such a Gemini, James. You are a Gemini.
James (Host - Lighthouse Financial Advisor) 0:59
Core traits? No emergency fund. No Gemini would have. an emergency file. Making you intellectual and adaptable. Uh I don't even know what some of these things. Curious, quick-witted, and highly communicative. A great conversationalist.
Matt Harris 1:15
Stop it. I've got the downsides of Gemini James. Inconsistency.

How much should I aim to save for my first emergency fund?

Matt Harris 1:20
A tendency to gossip. Mm. Uh trouble with deep commitments. And nervous restlessness. I dunno I'll give you tendency to gossip. You're pretty consistent. I don't think you have any trouble with deep commitments. Sometimes you are nervous, restless though. Um and and to be fair, you are governed by Mercury, so that does make sense. Um Yeah, look, enough about you. Let's move on to emergency funds.
James (Host - Lighthouse Financial Advisor) 1:46
So actually got a little bit of gossip for you, Mike. Of course you do, Jenny.
Matt Harris 1:53
Some juicy that's some juicy tea. I like that way. T's not juicy, is it? You're juicy. It's some of Pisces James. Um, yeah, look, emergency funds aren't the sexiest thing to talk about, right? They're definitely not as sexy as Pisces. However, they are very important. The reason that they are important, James, is because do you think, do you think life goes wrong sometimes? You think maybe you need some some quick cash?
James (Host - Lighthouse Financial Advisor) 2:16
As a Gemini, I would say that my conversationalist style does get me in trouble from time to time. Does create an emergency. Well, when you have to pay the bill.
Matt Harris 2:30
Right. And they can look very different for very different like people, right? Depends on
James (Host - Lighthouse Financial Advisor) 2:34
how much time you hang out with mine.
Matt Harris 2:35
It might be it might be that uh the car breaks down, it might be that kids need to go to the doctor, it might be your laptop breaks and you need it for work. Heck, it might be you've had a bad day, you're a Pisces, and you need to go shopping, right? So all of these things are things that you'll need to use an emergency fund for as opposed to using short-term debt.
James (Host - Lighthouse Financial Advisor) 2:54
I uh spent three hundred and seventy five dollars at the Singapore airport on a doctor, um, which I think would have classified as an emergency. What was wrong with you? Uh it wasn't me. It was my three and a half year old Cooper. Um he had a like a grass seed in his uh big toe that had got infected. And um so like we had taken him to the doctor. Tell you what though, so he like it was very he got very upset about it. He did like we had they had to like like um get the pus out and everything. But um But the thing that was funny about it.

Should I build an emergency fund before or after paying off short‑term debt?

James (Host - Lighthouse Financial Advisor) 3:29
Was was a three and a half year old. Like he was sledging the doctor because he wanted to get away. So he was like, he was like, you're a baddie, you're a baby, you're a baby baddie, get away from me. All right. Yeah. So um Uh I was like, We need to work on his um sledge again here. Yeah, yeah. It's never gonna work at first slip.
Matt Harris 3:49
Interesting little tidbit there, James. Yeah. Bit of gossip, if you will. Bad baby. Bad baby. Only one in three Kiwis could actually survive uh for more than one month if they lost their job. And only one in four could make it beyond three months. I wonder if there is income protection included in those stats.
James (Host - Lighthouse Financial Advisor) 4:05
I mean, getting sick is obviously an emergency if you lose your income. So it would be. Um, however, not many uh people have income protection.
Matt Harris 4:14
That effectively means that sixty five percent of people don't have enough savings to get them through three months without an income.

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