Hi everyone! I should've mentioned this in the video but this is the perfect time to concentrate on contributing as much money as you can towards your emergency fund, if you still need to build one. Some bills have been paused during the pandemic, like federal student loan payments, utility and credit card bills, rent/mortgage (but please do your research first to make sure you qualify before not paying). So if you have extra money at the end of the month and are deciding between debt payment or emergency fund contribution, I'd choose the emergency fund contribution right now. But if you can contribute to both debt and an EF... that would be ideal!
Bills don't pause...debt just accumulate. The debt is still there & the chicken will come to roost. My housing expenses come first. So many ppl prioritize other things that are NOT fixed expenses & are NOT necessities.
I started aggressively putting money towards my emergency fund because you've inspired me! I've saved up 12,000 now, my goal is 20,000, and currently am trying to encourage my friends into creating an emergency fund. Sometimes they misunderstand what an emergency fund is so I can't wait to share this video with them!
My emergency got wiped out with covid and I’m currently trying to rebuild it. I’m so thankful I had one in place when the pandemic hit cause it completely saved me.
Right now my emergency fund is just the basic $1,000 while I aggressively pay off debt but I do plan on adding more once I knock out some high interest debt
Goal is $125,000. Currently at $78,000. Emergency fund just in case for my family. Paid off my debt in 2018. And also have a saving fund set up as well. Love the content, sis!
It’s possible to “over save” in an emergency fund. I had way too much in a basic savings acct for many, many years. I recently moved most into a target-date index fund (leaving 12months of expenses). I’m pissed at myself for not doing it sooner. 😭
My main thought process for building an emergency fund is "If I lost my job today, how long would it take me to get a new one?" Every time I've been job hunting, it has taken 4-6 months honestly. That + pandemic, I've been aiming towards a 12-month emergency fund. But as incomes change, needs change, savings goals are reached, etc, that may go down.
I would love a dedicated video about down payment funds or just a dedicated how to invest/ investing strategies video! I really unsure as what to do and so I think it would be great! Also love your videos always! Thank for your content!
Yes would love to know different strategies for where to put a down payment. Currently just having it sit in a savings account but the goal is to buy in 2 years.
I have my down payments with Capital One in their 360 performance savings account but others use Ally Bank savings account. CDs could the used but I don’t want the money locked away for a year and the interest rate currently isn’t worth it for me.
Great video Aja Dang. i agree with all you've said in here about Emergency fund, it really helped me during the 2020 coronavirus pandemic I learnt a lot about emergency funds and savings. Saving has been my best part of emergency fund since last year(2020) till now 2021. Now am saving 20% of income towards my retirement and am investing 20% of my income also!!
@@daviluis5713 yeah 1. Set a monthly savings goal 2. Stash your windfalls 3 Slash your budget 4.Live within your means 5. Increase your savings 6. Invest your saved up $$ ( let your money grow) 7. Keep saving and investing beyond your goal
Aja your debt videos have been a lifesaver ! I’m now moving to Tennessee to go to grad school and by the time I go I’ll have $5,000 in emergency fund. Which is not a lot, but I’ve only been saving for 2-3 years and babysitting / working part time. My Budgeting still needs work, but I’m making progress 🙌🏽
I’m 23 and my boyfriend and I only have $2600 in our emergency fund but $10000 is our goal! Our incomes combined is probably $80,000 but both paying off debt and have two dogs. We just started being smarter with our money this year
We use $1,000 per person for a guideline during debt repayment. Once we’re debt free, we plan to increase to around $5,000 per person which for us would be $20,000. That’s about 5-6ish months of expenses for us!
Love this video! The pandemic has definitely showed me that I was lacking an emergency fund. I am now splitting my income by percentages: 50% Living Expenses, 25% Life Expenses (fun money and all sinking funds), and 25% Savings. I break up my savings into 4 areas: my child’s savings account, my basic emergency fund, a years worth of income (I plan to be a year ahead of my budget), and my dream house. Once an area is finished being funded that money will be invested instead of saved in my High Yield Savings Account. Good luck to you!!!
I am aiming for a solid year. I calculated my needs and it came to about 40% of my salary to live in minimalist emergency mode. I feel that a year is the smartest goal. I currently have six months saved. If I were to get laid off I would still be ok for a year with unemployment. After I get the entire year saved I will still feed money into that account but way less aggressively. You don't want to have a year saved, need it and then start with nothing in that fund again. After a year I will more aggressively put money into investments.
Would really benefit from a video on brokerage accounts - it sounds like that’s a great place to put money waiting for a down payment, but I”m not familiar and would really like to learn more from you, vs. a google search!
Thats what i thought. This strongly depends on which country you live. I live in the Netherlands so no medical stress. I can safely invest my excess money knowing that basicly 20k savings will be more then enough if my car or wife's car breaks down or something like that . But this emergency fund is an interesting idea.
Agreed! I live in Canada, so I'm lucky that medical expenses aren't too much of a concern, but my main business has now lost two years of income due to the pandemic and I've never been more grateful for having kept a really large emergency fund to see me through this!
I have been struggling with being a huge spender. I'm planning on finally moving out by the summer with my boyfriend and am trying to find ways to save, especially an emergency fund. This helped so much!!
$50K in an emergency fund is overkill - I always say as a rule of thumb, when's the last time you or someone you knew had a $50K emergency - shoot, how about a $10K emergency? It's super rare. Right now I keep a 9 month emergency fund and its been over 5 years and I've never had to dip into it once.
Agreed!! I had 30k in an EF for a few years and knocked that down to 18k @ 3k/6mo and used the rest to pay off a student loan. I realized that 30k was nearly a 12mo EF for me and it was unnecessary so I rebalanced. 50k seems crazy!!!!
I think it's more so the "feeling" of security and also people do have medical/health emergencies and having savings that significant does come in handy. But I understand where you're coming from.
In the 2008 recession it took the majority of people 1 to 1.5 years to find a new job. This event is what you are saving your emergency fund for and is why I have 1 year of expenses saved. I’m not confident I would be able to quickly find another job so that went into my decision making.
@@xxxxMonkeyGirlxxxx So you are building your fund around fear and possibility and not reality and actuality. In the 2008 recession, I don't know anyone personally who looked for a job for 1 to 1.5 years so I am not going to build a cushion based off of the worst that happened to someone I "heard" about when a good portion of that money can serve me better in other areas of my life such as debt pay off and or investing for retirement.
There's no need to judge other people's needs. A single person in a rural area is probably going to need less in an emergency fund than a person with kids living in a high cost of living city. Not everyone has the same expenses. Plus if they can afford to save 50k they can probably afford to invest an equally substantial amount.
Thank you for this video! It wasn't until recently I separated my actual emergency funds vs. other funds (house downpayment, sinking funds, vacation fund) and into its own bank account. It makes a huge difference when you know how much your 3-6 months (I am saving 4 months and rounding up) expenses are and just focusing on that. It is much more achievable, and I can save and plan for other things!
I’ve been finding it easier to pay off my credit cards before saving for my emergency fund. I’m praying that I don’t have an emergency but my cc debt should be paid off next month.
I'd love for you to review previous budget videos/tips when you were in debt and go through what you wish you did more, what you regret doing and what you would change if you had to do it again. I think it would be so helpful for anyone still going through the debt free journey (I've £8500 to go which will hopefully be gone in a year and half). All the best Aja, your videos have made the biggest difference to my life ❤️ £10k down £8500 to go! X
Hi Heather! I’m an avid Aja Dang subscriber. I would personally watch her “Financial Journey” Playlist here in RU-vid. She covers all of this. I’ve personally watched this playlist countless times. Good luck on your debt free journey ✨✨
My husband and I are both essential workers, so luckily, we weren’t affected by the pandemic. With that being said, we have 3 months saved in our EF. I defs would like to see a more in-depth video on where to put your down payment! We just bought a townhouse, and we kept the money in a traditional savings account. We’re already starting to save for a detached house, that we can hopefully buy in 5-10 years. Love from 🇨🇦
I have 2 numbers for my emergency fund. I have my bare bones expenses (cutting as much out as possible), as well as my normal monthly expenses. My first goal is to save 3 months of bare bones and then work towards 3 months of normal expenses. Once I reach that point I’ll evaluate if I want to get to 6 months for each or not.
I would love to have at least 1 year of an emergency fund. If I were to ever become laid off again, I would like to know that I have at least 1 year to find a new job. I would be able to take my time to find a new job that I enjoy instead of having to settle on something because I was running out of time.
I love your suggestion of having your funds work (such as if you're saving for a downpayment)for you by putting it into a higher yield account. Thanks, Aja!
Out of interest, I’d be curious if you asked about country for your question about emergency funds? I know for me in Australia, just paying my rent for 6 months is $15,000. Once I add in additional living expenses, I can’t live on less than $40,000 for 6 months, & yes, that’s bare minimum survival living where I am now, keeping the kids in the school they’re in now, and maintaining services such as internet, mobile phones, etc on top of the basics such as food, electricity, gas, water, car expenses, insurance, vet expenses and so on. So it wouldn’t really be unreasonable given what we’ve seen with COVID for me to have an aim of $100k or more as my emergency fund! This is just because the cost of living in Australia is very high (& our wages are high to match).
Thank you for the continued encouragement. I have cleared away 2 credit cards this year that were about to actually cost me more money so have moved them around to my existing debt all on 0% interest. Over paying debt and putting (baby steps) £155.00 away in a separate account for sinking funds which includes an E-fund. Once cards are clearing the money will then be used to finalise e-fund. Currently looking at 6 months however will probably aim for 12 months. Thank you
Aja, we're thinking along the same lines! I put my house down payment in a Vanguard brokerage account too. :) It has a mix of ETFs that have given me a great yield. My 6-month emergency fund is with Synchrony, an online bank. Meh 0.5% return. I haven't had a need to touch it, so all my extra money from my monthly salary goes to the brokerage account (and my yearly maxed Roth contribution). Thanks for being such a great role model and showing people that finances are cool!
@@ccap3211 In three years, it's returned me 13.3%. Past five years: 13.2%. Past ten years: 10.1%. And I know you shouldn't pay attention to a one year return since the market fluctuates, but it's showing me a whopping 30.7%, which is insane. 😁
@@vannie8511 I have a lot now, honestly, but I started out with mainly just Total Stock Market, Total International Stock, Real Estate, and Value. In the past few years, I started playing around by adding more, like Small Cap Growth, Information Technology, Energy, Financials, Health Care... too many to name, really. If you're just starting out, I would suggest investing over the entire market (like Total Stock and Total International). But definitely just do some research on what experts consider the best ones, and really think about how much risk you're willing to take. A lot of the ETFs I chose are labeled as high risk.
I initially saw the title and thought: *I’m supposed to save HOW much for my emergency fund?* 😮😅😅 Thank you for this informative vid, I’m at 3 months, but I’d love to get to 6 months or so in my emergency fund :)
I used to be comfortable with a 3-month emergency fund but boosted it up to 6 months once I bought a condo! Being responsible for the place I live brings a whole host of potential expenses to plan for.
My emergency fund goal is 1 year of expenses. I picked 1 year of expenses because I’m not confident that in a recession if I lost my job I would be able to find another job quickly. In the 2008 recession the average was 1-1.5 years it took for the majority of people to re-find a job. If I find a job faster than that, that’s great, but if I don’t then I’m still okay.
Not sure whats going on with youtube algorithm But Inhabe now been recommended all these great channels like yours. All ladies that are rocking the financial niche! Great job love your content!
I've had a large emergency fund for years (1 year of expenses), plus a separate fund with my partner dedicated entirely to being able to keep my house should my income be impacted. I run a seasonal business (weddings) where even just having a few months of work impacted basically impacts my entire year. My two emergency funds end up doubling up a bit, but thank god I had them during this pandemic! I've basically had two years of income impacted now, so I definitely don't regret keeping my emergency funds larger than we're traditionally taught they need to be. I just keep them in a Canadian HYSA, so the money is still working for me a bit.
Ive also included repairment costs of lifestyle ‘essentials’ into my emergency fund eg; iPad or phone. Just because if it breaks it’s unrealistic for me to wait to save up for a replacement because i need them for work. It’s comforting to know i have the money there just in case!
My goal is $20000 which is about 4 months of expenses. I currently have a quarter of this in my emergency account but I save towards other things at the same time including shares, new car and a house deposit. Very good information. Being that interest rates are so low, I don’t want to keep too much in cash!
I could Listen to Aja all Day Every Day! But I do kinda of miss hearing her swear about her debt.Lol but she’s a better and happier person Now I’m sure. Huge Fan
Is it possible that some of the people who said they were saving for an emergency fund were considering significant medical bills? Like what if you break your arm in the USA but have no insurance?
Thank you so much for doing this video! It’s actually been something that I’ve needed help clarifying for myself, or as a reminder. Now I need to figure out what to do with opening up a high-yield savings account And/Or learn how to invest once I reach my emergency fund goal.
Sinking funds in combo of EF is so great! This makes you less tempted to dip into the EF if you need to buy something. For example, My bank allows me to open multiple online sinking funds for: 1) my tech goals, (like a new sony camera, go pro and other tech) 2) a house reno project 3) fun money :D aka money for trying new food, experiences and online shopping.
Well I keep coming back to this video periodically throughout the year. I built my emergency fund up to $2,000 earlier this year but then I decided to change to overnight shift at work so I bought an electric moped for $1902 because the buses dont run late enough. Its been a few months since that purchase and Im just now getting back around to saving again. I have been prepaying my rent though so that Im always ahead if anything happens to my income. Currently paid up til August....
Can you do a video on your retirement savings? And what company you went with and why? I see charles schwab, ally, etc. but having trouble choosing the right one.. also how did u chose between 401k or ira? I used to have a 401k but had to break it due to losing my job. Now that I have another job, I want to start another retirement plan but unsure about paying fees for upkeep and also not comfortable with putting it into ira where I have to "gamble" and put money where I might or might not lose money...
Hi Aja, you've explained things very well in this video! 😍 I already have an emergency fund but it's the only "extra" money I have now. Could you do a video about accounts with high rates of return - if possible - that can be found worldwide? I don't how to choose one and when to trust an online bank. I look forward to your insights 🙏🏻✨ Thank you for your content, you're inspiring young people like me to grow into responsible and money-smart adults 😊 Also, obviously yes to your video idea!
Im building one for myself and house necessities and a separate one for my mom and three dogs. My mom lost her job like two weeks before the pandemic hit our area and I’ve been having to handle my monthly expenses plus having to help her so that’s why I decided I start building one for her and the dogs, cause I am a crazy dog mom lol, and one for myself and house expenses.
I have a year saved in my emergency fund, I have covered my family’s normal needs in the calculation, which is not as crazy as it sounds, because I’m debt and mortgage free 🙏 (which took a lot of hard work to reach) But because of the pandemic I saved from 6 months up to 12 months in the emergency fund over the past year 😌🤞so now we are at 12 months of expenses 🤑
Hi Aja! I wanted to say that you're videos have been super helpful to me and my financial journey. I wanted to know the ways I could save up for grad school and where you'd put that money. This would be in the near 2-4 year period.
I had $5000 in my emergency fund, had a job open up for me in JAN so used the entire fund for relocating. Job said they would reimburse up to $3000 but still waiting on them, it does usually take this long. Now my EF has about $1000 and working to bring it up to $7000-8000.
I always had my emergency fund on the back burner of my to do list. COVID taught me anything can change at any time. So, I’ve now been building it. My only two debts are my car and my house. I’m breaking the baby steps and filling my emergency fund to $10,000 before attacking my car. Once my car of paid, I’ll bump my emergency fund to $15,000, then attack the mortgage.
My EF is 6mo bare bones expenses at 3k per month in a HYSA. I built up my EF prior to tackling my debt snowball to feel more secure. I can drop down to 2k if student loans are paused during my emergency/laid off/etc but for now I have 18k put aside. When I buy a house, I was going to up my EF to 4K per month to ensure all bills and mortgage is covered. I have been saving towards a 20k down payment, currently at 17k, in a HYSA. Interested to hear more about where to store this?!
I have to disagree - a savings account is best suited for a down payment. There is no guarantee your investments would have a gain, and if they did it’s subject to capital gains tax. Even bond funds can lose value (as they are now).
I decided this year that my Emergency Fund needs to be 10.000 euros. I'm at around 6.000 so I'm already feeling good about that but I think the round number of 10.000 will give me solid peace of mind.
I’ve heard that any money you want to use in 5 years or less like for a down payment shouldn’t be in the market because of potential volatility. Thoughts? I have 48k so far and feel like it’s not earning much obviously. I hear putting it in bonds is safer.
You can choose different mutual funds that are lower risk than others. You could also put a portion in bonds and a portion in mutual funds, to diversify your risk. I feel like five years is enough time to put your money in the market (that's what I've been doing, and it's been very successful so far... 5 years has given me 13.2%). If it's just a couple years, then yeah, be safer. But again, it really depends on how risk averse you are.
You are correct. Do not have it in the stock market. You can use Ally Bank savings account or Capital One 360 account instead. You are correct you won’t earn as much money but with interest rates low in general right now it you don’t have many options. Putting it in the stock market risks the value going down and when you need the money in the next 5 years sometimes it’s not worth the risk
Experts do say you shouldn’t put your money in the stock market if you need it in the next 5 years, but it really depends on your risk tolerance. I would personally invest in bonds as they are more conservative, but give a higher return than money market accounts.
@@xxxxMonkeyGirlxxxx yeah mind is in capital one 360. I feel like I’ll be buying in less than 5 years of all goes well so I’m not willing to risk market dips.
Emergency fund being based on expenses is odd bc those expenses can be controlled. Ppl don't wanna reduce their expenses so they pursue saving more which is daunting when ur not a high earner. Ur income for most part cannot be controlled.
It’s meant to be calculated based on the absolute bare minimum expenses, as she said, like keeping a roof above your head, the lights on, and food on the table.
Since COVID-19 I decided to increase my emergency fund to $35,000 to cover an year worth of expenses. It's going to be a long process because I'm trying to pay off debt and put 24% of my salary in retirement funds at the same time.
I’m aiming for 3 months of emergency fund, about £4000 (UK). In case we are unable to work due to something like redundancy or Sickness. Some of it is in a separate bank account and some in cash.
Been following Aja for a while now. Originally for her bikini videos, but it's been great to see her evolve into a tried and tested expert who has taken us on her journey into personal finances. Seeing you pay off your student loan debt was very inspiring and interesting to see 👍👍👍
I personally have 2 years worth of expenses in my emergency fund: 1) It makes me feel very secure financial; allowing me to remain unemotional when it comes to investing for growth 2) My emergency fund is all I-Bonds. So while I am not earning interest, I am also not losing money to inflation. Given I need my emergency fund to be immediately available at any time, I view a guaranteed real rate of return of 0% annually for 30 years as excellent,
Emergency fund is not the same as "holding cash" for a down payment/waiting for a good investment opportunity. It is money that should be set away, if possible in a separate account and not to be used unless its an emergency. Should typically be 3-6 months of your "necessary" living expenses.
3-6 months has always been the general rule. But the pandemic has shown that 3-6 mos. is not much when facing long lockdowns with no job. God help us if have to ever see that again but i can see why people feel 3-6 not being enough.
I have 6K for my emergency fund but I am working on getting it up to 15-20k. I am considering investing some of my HELOC in the market (10/22 lows) to help build it faster.
Good advice. I’m doing something similar. I have a combination of savings accounts which serves as my emergency fund that’s liquid and safe but I’ve also been building up my brokerage account for a few years now with extra money so it also serves as savings or possibly just long term investment if I don’t ever need it. I also put money I won’t need for 2-3 years in the brokerage account like vacation fund for a big family trip abroad. The money is all together in one account but I have a spreadsheet so that I know how much I allocated for vacation, savings, etc.
I always thought emergency fund is 6 months of your monthly income (as broken down by my college economics teacher; maybe it works slightly different in Singapore where we are more afraid of having lesser than we need when emergency do require touching the fund but 3-6 months of expenses do make sense) so I frantically saved on my emergency fund to reach 6 months worth of salary. It was tough. 😣 but definitely worth it!
