Building An Emergency Fund During Economic Uncertainty

Your emergency fund probably isn't big enough. There, I said it. Most financial "experts" are still pushing the same outdated advice: "Save 3-6 months of expenses and you're good to go!" This could be dangerous for most business owners and high-earners today. → If you're bringing in variable income → If you're self-employed → If you have people depending on your earnings The standard 3-6 month emergency fund is playing with fire. Here's why: When you run your own business or have commission-based income, market downturns and economic factors don't just affect your investments—they hit your actual income. Exactly when you might need cash the most, your ability to generate it could be compromised. I've seen it happen: → The fitness business that had to completely shut down for 4+ months  → The sales professional whose commissions dried up for 3 months None of them anticipated these scenarios. All of them wished their cash reserves were larger. For business owners and variable income earners, this is probably more in line: → 6-12 months of expenses  → Separate business and personal emergency funds → Additional cash reserves for business opportunities This isn't about fear. It's about freedom. A robust emergency fund doesn't just protect you—it empowers you to take strategic risks, seize opportunities, and sleep soundly regardless of market conditions. Will this approach mean slower investing in the beginning? Maybe. Will you thank yourself when (not if) the unexpected happens? Absolutely. I'd rather see a fully funded emergency fund before focusing on growth.

You get a new nicer apartment… but your hours get reduced. You move across the country for a new job… and get laid off weeks later. You get into an accident… and your health insurance only covers a fraction of what you need. These are the kinds of financial emergencies that plague our collective nightmares. While you can’t always fully weather-proof your finances, there are some steps you can take to make the bumpy rides a little smoother. 1) Increase your emergency fund. The first step of any financial plan is to get 3-6 months of living expenses into a high-yield savings account (HYSA). But maybe you’re worried about how long it can take to get a new job or you’re considering a move–having extra savings can help put your mind at ease. Especially if you have a family or others who depend on you financially, you might want to increase your emergency fund. 2) Move your emergency fund into a HYSA if you haven’t already to get that extra interest rate boost. I've got the one I recommend on my website's Money Tools page. 3) Keep your set expenses low. This is something that can be hard to change in the moment, but a great way you can prepare when things are going well. If you’re thinking, I wish I could!, I get it. Here are some things to keep in mind: Avoid subscriptions and recurring costs. Give extra consideration to expenses that you can’t easily change (like car payments and apartment leases).  Know the terms of cancellation and any penalties before purchasing. 4) Make your ramen budget. This is your budget based on the absolute minimum you can spend. I made one when I was going full-time with HFK to help deal with the anxiety of becoming an entrepreneur. You might even do a few versions at different levels. Here are some questions to ask yourself: What could I cut immediately? What could I cut with some leeway? How could I make some extra cash? Sometimes there are practical things you can do now to make things easier later. Sometimes going through the thought process of “what would this be like?” can help you work through your money anxiety. And sometimes things are just tough and there’s nothing you could have done to prevent them. I’m not going to tell you that you should just pull yourself up by your bootstraps. But I am here to tell you that while there’s only so much you can do, you can do those things and adjust your money plan. Just take it one day at a time.

I saw people come back from meetings with envelopes and a box.    Another layoff.  I wasn’t impacted that time.   But I knew they weren't done.      That feeling made me sick.       I’d seen this movie before.  The moment things go silent… is the moment you start preparing.      Freezing is not an option. Security isn’t about working harder;   It’s about taking steps to be prepared for anything.    Here are 4 things you should do so a layoff doesn't catch you slipping:  𝟭. 𝗗𝗲𝘁𝗲𝗿𝗺𝗶𝗻𝗲 𝘆𝗼𝘂𝗿 𝗳𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗙𝗹𝗼𝗼𝗿 What are your essential expenses? What are the minimum expenses you MUST cover? Determine that number, multiply it times 3, save that amount. 𝟮. 𝗕𝘂𝗺𝗽 𝘂𝗽 𝘆𝗼𝘂𝗿 𝗘𝗺𝗲𝗿𝗴𝗲𝗻𝗰𝘆 𝗙𝘂𝗻𝗱 Expecting a tax refund, save it. Saving for a vacation, downgrade it and move money to your emergency fund. Compromise a little now to avoid pain later. 𝟯. 𝗗𝗲𝗰𝗿𝗲𝗮𝘀𝗲 𝗰𝗿𝗲𝗱𝗶𝘁 𝗰𝗮𝗿𝗱 𝗱𝗲𝗯𝘁. With Interest rates at 20%+, you want to pay down balances ASAP At a minimum, stop increasing your credit card debt. Do what you can pay more than the minimum each month. 𝟰. 𝗚𝗲𝘁 𝗮 𝗣𝗹𝗮𝗻 𝘁𝗼 𝗥𝗮𝗶𝘀𝗲 𝗖𝗮𝘀𝗵 In a dire situation, what could you do to raise money? Can you take on projects? Do you have things you can sell ( jewelry, designer bags, household items? ) Is it possible to get a roommate? Things are changing quickly. Pay attention to the signs and act accordingly so that you aren’t caught off guard.