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emergency fund

This week’s money news

June 3, 2024 By Liz Weston

This week’s top story: June mortgage rates. In other news: Some big stores are cutting prices to woo back grocery shoppers, rename your ’emergency fund’ if that suits your saving style, and first-time home buyer affordability report – Q1 2024.

June Mortgage Rates: Calm at Takeoff, Then Subject to Turbulence
Mortgage rates probably won’t vary much in the first week and a half of June. But starting June 12, it’s anyone’s guess what rates will do.

Some Big Stores Are Cutting Prices to Woo Back Grocery Shoppers
With grocery prices stabilizing, retailers like Target and Walmart are touting summer discounts on an array of items.

Rename Your ‘Emergency Fund’ if That Suits Your Saving Style
Whatever you choose to call your short-term savings account might help you use it more effectively. Here’s how experts suggest you approach it.

First-Time Home Buyer Affordability Report – Q1 2024
In the first quarter, prices didn’t rise, but they also didn’t come down.

Filed Under: Liz's Blog Tagged With: emergency fund, first-time home buyer, grocery prices, mortgage rates

This week’s money news

March 20, 2023 By Liz Weston

This week’s top story: Smart Money podcast on CDs and managing a life-changing windfall. In other news: How to minimize the impact to your business from a bank failure, how Silicon Valley Bank failed, and the hurdles on the road to Medicare coverage of cannabis.

Smart Money Podcast: Are CDs Worth It, and Managing a Life-Changing Windfall
This week’s episode starts with a discussion about certificates of deposit, or CDs.

Spooked by Bank Failures? Minimize the Impact to Your Business
Keep an emergency fund at a separate business bank to help insulate your company from a bank failure.

How Silicon Valley Bank Failed (and Why That Probably Won’t Happen to Your Bank)
Silicon Valley Bank failed after a series of events that aren’t likely to happen at your bank.

When Will Medicare Cover Medical Marijuana?
From regulatory to more practical issues, here are the hurdles on the road to Medicare coverage of cannabis.

Filed Under: Liz's Blog Tagged With: bank failures, CDs, certificate of deposit, emergency fund, marijuana, Medicare, Silicon Valley Bank failure

Q&A: Emergency fund: How big?

February 15, 2021 By Liz Weston

Dear Liz: You recently advised a teacher who was inquiring about paying down student debt. You suggested among other things to “have a substantial emergency fund before you make extra payments on education debt (or a mortgage, for that matter). ‘Substantial’ means having three to six months’ worth of expenses saved. If your job is anything less than rock solid, you may want to set aside even more.” Granted, this is in the context of the student debt question, but is that emergency fund advice still valid in light of studies showing the liquidity needs of lower-income households to be much lower?

Answer: The usual advice about emergency funds is often unrealistic and sometimes absurd for most low- or even moderate-income households.

The advice is usually given by financial planners who typically work with higher-income clients. The higher your income, the more likely it is that you have the free cash flow to quickly build a large emergency fund.

An analysis in the New York Times found that a household with income over $200,000 would need about two months to save one month’s worth of expenses. A household with income of $70,000 to $99,999 would need seven to eight months to save one month’s worth. A typical household with two or more people and income of $50,000 to $69,999 would need more than two years to save a single month’s worth of expenses.

As you’ve noted, though, various studies have found that much smaller emergency funds can help households avoid catastrophe.

A 2015 study by Pew Charitable Trusts found the most expensive financial shock suffered by the typical household amounted to $2,000. But as little as $250 can reduce the odds that a low-income household will suffer serious financial setbacks such as eviction, according to a 2016 Urban Institute study.

A three-month emergency fund could be a long-term goal, but it’s not something that should be prioritized over more important tasks such as saving for retirement or paying off high-rate debt.

Such a fund should be a priority, however, over paying off lower-rate, potentially tax-deductible debt. That’s especially true when you’d be making extra payments on student loans. Paying down credit cards can free up additional credit to be used in an emergency, but payments sent to student loan lenders are gone for good.

Filed Under: Q&A, Saving Money Tagged With: emergency fund, q&a

Tuesday’s need-to-know money news

December 15, 2020 By Liz Weston

Today’s top story: Calibrate your emergency fund to a crisis-prone world. Also in the news: How to give stock as a gift, what you need to know about Joe Biden’s student loan plan, and the pros and cons of Buy Now, Pay Later retail loans.

Calibrate Your Emergency Fund to a Crisis-Prone World
Financial advisors are urging clients to consider expanding their emergency funds.

How to Give Stock as a Gift (And Why Tax Pros Like The Idea)
Is it better to give than to receive? Certainly. But giving while receiving a tax benefit is pretty good, too.

Will student loans be forgiven in 2021? Here’s what you should know
What you need to know about Joe Biden’s student loan plan.

Are ‘Buy Now, Pay Later’ Retail Loans a Good Deal?
The pros and cons.

Filed Under: Liz's Blog Tagged With: buy now pay later, emergency fund, gifting stock, Joe Biden, Student Loans

Thursday’s need-to-know money news

May 21, 2020 By Liz Weston

Today’s top story: Should seniors consider a reverse mortgage now? Also in the news: Make the most of these store cards during a crisis, financial experts say a recession could be looming, and why you should think of your HSA as an extension of your emergency fund.

Should Seniors Consider a Reverse Mortgage Now?
Reverse mortgages offer tax-free cash for home equity, but understand how they work and explore alternatives.

Make the Most of These Store Cards During a Crisis
Some of the best cards to optimize your budget.

Financial experts say a recession could be looming; here’s how you can prepare
Be proactive.

Think of Your HSA as an Extension of Your Emergency Fund
Your contributions can increase in 2021.

Filed Under: Liz's Blog Tagged With: emergency fund, health savings account, HSA, recession, reverse mortgage, store credit cards, tips

Monday’s need-to-know money news

April 27, 2020 By Liz Weston

Today’s top story: Should you use your emergency fund during the COVID-19 outbreak? Also in the news: A new episode of the SmartMoney podcast on the Coronavirus relief checks, why you should join a money community for financial support, and 13 tips to help protect your online financial information.

Should You Use Your Emergency Fund During the COVID-19 Outbreak?
Don’t be afraid to use it when you actually need it.

SmartMoney Podcast: ‘Where’s My Coronavirus Relief Check?’
Finding your $1200.

Why you should join a money community for financial support
Strength in numbers.

13 Tips To Help Protect Your Online Financial Information
Cybercrime never rests.

Filed Under: Liz's Blog Tagged With: Coronavirus, COVID-19, cybercrime, emergency fund, financial support communities, SmartMoney podcast, tips

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