Also, remember that Life Happens.And especially as a woman in the tech industry.That said, there are many reasons beside âlosing your incomeâ to have an emergency fund, so this only helps so much.(Which sounds incredibly callous…wow.)
But, you can start it all with an Emergency Fund.
Do you realize you need a bigger Emergency Fund but have been unable to make yourself build it? Reach out to me atÂ firstname.lastname@example.orgÂ orÂ schedule a free consultation.[Eating For Tips At Creative Saving In Home Eat Money].You want quite a lot in order to survive the crap life can throw at you.But There Are So Many!
The government shutdown has made very clear one reason to have an emergency fund: you might unexpectedly lose your income.And thatâs a totally legit strategy.Oh please believe that it happens.Reproduction of this material is prohibited without written permission from Meg Bartelt, and all rights are reserved.
Working in tech might give you all sorts of other ways to create one overnight:
RSUs and bonuses.
You cannot cruise the internet without tripping over articles about the partial government shutdown and the increasingly horrible effects itâs having on many government workers and their finances and their psyches.[Lady The With Investing Gets Serious Experiment Finally]
The post Emergency funds.
Lest you be depressed by this whole discussion: Itâs also possible to construe this in a positive light.If you get laid off or need a higher-paying job, you want to have all the professional horsepower you can.[In Do 7 With New To Orleans Kids Things]
You can adjust up or down depending on:
How risk averse you are
Keep more in cash if you are the anxious type! Nothing wrong with that! (Yes yes, âBut you could get a bigger return if you invested the extra money instead!â…Try to comfort yourself with that when youâre lying awake at night worrying about your finances.)
Other sources of income in your household
Do you have some side hustles? Do you have a partner with income? Do you receive rental or passive income? Basically, the more âdiversifiedâ your income stream, the less you need to protect against loss of any one of them.It takes a village to grow and protect a meaningful, healthy personal and professional life, too.
A wind storm destroys your roof.To regular people.Read the fullÂ Disclaimer.[Engaged Every Financial Stay Wellness With Age At]
Your Emergency Fund is one part of âRisk Management,â as weâd say in the trade.And judging from a lot of the RSU vests and bonuses Iâve been seeing lately, that could likely get you all the way there in one shot.Â Â Per paycheck. What else are you going to live off of? Life insurance.If anyone depends on you for money, you need to make sure they can still get money even if you, ahem, kick it.[Most Memoir Things Animated 3 The Profitable The Lady8217s]
Most people simply have to save a bit out of each paycheck until theyâve built theirs up.And thatâs where a strong professional and personal community can really shine.Biggest problem is that it takes time, and we humans are nothing if not impatient creatures.An Emergency Fund Is Only One Part of Protecting Yourself
No one part of your financial life stands on its own.Like you or me.) Whoops! Underpaid your taxes last year and now itâs April 15.If youâre the âexpect the worstâ kind of person, Iâm sure you could add a few dozen more scenarios to that list.Itâs important to reduce your concentration in company stock in order to reduce your investment risk, but selling some to fully fund your Emergency Fund might be an even better motivation.And if you depend on anyone for income, make sure they have life insurance.We canât plan our way around or out of all the risks in life.I encourageÂ you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation.Donât coast in your career, especially when youâre in the early or middle stages of it.When your life goes pear-shaped, Iâd love for you to have many risk-management tools in place:
An Emergency Fund.An Emergency Fund can give you the freedom to change your life, like, now: quit a job, change your living situation, and so on.[Attend You Wedding Know To Much Spent Youve A Do]
It doesnât take a village just to raise a child. Particularly in tech, big âlumpyâ income is pretty common.I canât tell you how many women have come to me in the last year who list âWhat am I supposed to do with this giant pile of cash in my bank account? I know I should do something, but what?â Voila! Funding an Emergency Fund is a great first use for it.(Iâm suppressing.)
And on and on.If youâre working in the tech industry, how should you think about one?Losing Your Job is the Obvious Reason to Have an Emergency Fund.[Awesome Yours Does 401k How Compare Anatomy An Of] I already mentioned it above, but if this is the approach youâre taking, you might even consider reducing your 401(k) contribution (not below whatâs necessary to get your full match, mind you) to free up some money to accelerate your savings.Many of my clients come to me with a lot of company stock, usually because they simply havenât been paying attention to their RSUs vesting every quarter for years.Â If you become disabled, youâre going to need to replace your income for a long time.[Points AF My Score 038 Credit Happy Im Dropped 47] How Big Should Your Emergency Fund Be?
I think Iâm pretty âaverageâ in recommending my clients have an Emergency Fund equal to 6 to 12 months of baseline expenses.Itâs part of a larger picture, whether or not you recognize that, or whether or not know how to make all the pieces fit together well.
Do you have parents or other folks whom you could rely on to help you out financially if you needed it? I have many clients who really donât like to think about that, but know they could rely on their families if they needed to.Which, thankfully, is perhaps the easiest thing I just listed.[RSUs Idea You Video A Better For There Are Just Of Vested Lack Your Letting Sit]
The whole situation is doing a marvelous job of illustrating that you do not want to have only a little bit of cash in the bank.âBaselineâ meaning youâd strip out all the unnecessary expenses in your life (eating out, trips to Ulta Beauty, 3-D printer parts, etc.) and get as close as possible to just the unavoidable expenses (insurance premiums, rent or mortgage, school tuition, groceries, etc.).
You get laid off.But how you actually create yours (or increase yours) can be very different if you work in the tech industry.[Should Do Starting Saving Challenge Any You Setting BEFORE Hack Money The Goal]
Basically, an emergency fund comes in handy when Bad Shit Happens that you canât reasonably predict. But do you actually have one that’s big enough? appeared first on Flow Financial Planning.
An emergency fund is a concept that applies to everyone.(And there, too.) You or your spouse becomes disabled.Sometimes the best laid plans arenât enough.Â Sell some of your pile of company stock.If youâre accustomed to living off of your normal paycheck (and let me say, thatâs a good thing to be accustomed to), you can just shovel RSUs or bonuses directly into your Emergency Fund.(This happens.(Also been there.) Unexpected last-minute expenses when buying a home.(Yup.) Damn kid breaks her arm.(Ahhh, home ownership.) A loved one is in a crisis and you wantâneedâto support them.(Been there.) Your pet gets sick.[How With Deal To Disappointment] Long-Term Disability insurance.And you know what? As systemically unfair (this has all sorts of implications for the racial wealth gap, for example) or as icky as that feels, itâs a reality for you.In the tech industry, âfurloughsâ arenât exactly gonna happen, but layoffs do. Existing pile of cash.This covers short-term needs.[Ticket To Leo Comes Giveaway Pittsburgh]
Sign up for Flow’s weekly-ish blog emailÂ to stay on top of my blog posts and videos, and also receiveÂ our guideÂ How to Start a New Job (and Impress Yourself and Everyone Else)Â for free!
Disclaimer: This article is provided for general information and illustration purposes only.Â Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services.And cultivating that village is an important part of your own risk management.
Enter the Emergency Fund.Yes, they’re boring.(If you have a big mortgage with someone, or kids with someone, you both probably need life insurance.) Estate planning documents, like Powers of Attorney and a Living Will Marketable career skills and a strong professional network.We all know they happen during industry implosions like in the Dot Com Bust in the early 2000s, but they also happen even now, in these heady tech times (witness: Tesla, and also tiny (former) startups that some of my clients have worked at).[To You New Happy Year All]
Keep in mind that if youâve got high-interest debt (see: Credit Cards), itâs probably best to pay those off first.