00:00:00 Thanks for joining me on Episode 580 of the inspired stewardship Podcast Thanks for joining Me on Episode 5 80 of the inspired uh, they lose a job. They don't have an emergency fund, so they just keep living exactly the way they were living before. And they usually use debt toe fund it that use credit cards and other things, and that debt begins to mount day after day after day. And then it's six months or a year before they actually get fully employed again. And now, Now all of that income is tied up trying to dig out from under the mess that they made Welcome and thank you for joining us on the inspired stewardship podcast.
00:00:47 If you truly desire to become the person who God wants you to be, then you must learn to use your time, your talent and your treasures for your true calling in the inspired stewardship Podcast will learn to invest in yourself and best in others and develop your influence so that you can impact the world. In today's episode about investing in yourself through stewarding your treasures. I talk with you about how an emergency fund works. Why having one can cut your emergencies in half and what to do if you don't have an emergency fund,
00:01:29 but then find yourself in an emergency as we talk about stewarding your treasures. Wouldn't it be great if you could support this podcast and do it without costing yourself an extra dime? It turns out you can't. All you have to do is use inspired stewardship dot com slash amazon when you're ready to make a purchase via Amazon, and a small commission will come back to support the show. If you enjoy the show when you're ready to buy from Amazon, just use inspired stewardship dot com slash amazon. Let's talk about emergency funds,
00:02:06 and right now, depending on what's going on with you in the cove in 19 situation, this may be really relevant. And one of the things I'm going to talk about today is what to do if you are in an emergency but didn't have an emergency fund ahead of time. But before we get there, let's talk a little bit about what an emergency fund is and how it works. You know, simply put, an emergency fund is simply some money that you've set aside that you don't touch,
00:02:34 you don't do anything with its not in in an investment. It's not in anything that's a long term deal.
00:02:40 It's not meant to make a lot of money or anything. It's simply there to be used in case of an emergency.
00:02:47 It's the money that you set aside. So when something goes wrong and notice, I didn't say if you've got some cash to help,
00:02:55 take care of it. And that cash is readily available. Doesn't necessarily mean it's cash that you're storing in a coffee can on your back shelf.
00:03:04 But it does need to be readily available, and it needs to be the cash that you would use to kind of weather that storm.
00:03:12 So one of the questions that people ask is, How much should I have in my emergency fund? And the short answer to that is,
00:03:17 well, it depends. There's both a financial and an emotional factor. When you're thinking about it, what makes you feel secure?
00:03:25 But at the same time, you don't want so much money tied up in cash that you're not able to afford to do other things like long term investing and saving money for other purposes.
00:03:36 See, by definition, an emergency fund is money that you put aside that you do not use for anything else.
00:03:42 It doesn't turn into a new couch fund. It doesn't turn into the money to go on vacation fund.
00:03:47 It doesn't turn into the money that you buy pizza with its there on Lee for emergency, separate and isolated from everything else.
00:03:58 You know the rule of thumb that the gurus will tell you is 3 to 6 months of expenses, meaning if you lost your job,
00:04:05 would you be able to pay to keep the lights on? Keep food on the table. Keep the roof over your head for at least 3 to 6 months,
00:04:12 and that's a good starting point. But you also want to think about things like how secure is your income?
00:04:17 How secure is your job? You know, most of the time our jobs are pretty secure, but maybe you're in a field where there's a large about a turnover.
00:04:27 Then you definitely want to air on the side of having more money. Set aside. If your couple are there,
00:04:34 both of you employed or just one of you could you survive on one of your incomes? Well, then maybe you can afford with having a little smaller emergency fund.
00:04:43 But then there's also the feeling of. But do you feel secure? So you kind of wanna get into that idea of figuring out together with your partner or if you're a single by yourself?
00:04:56 What kind of amount of money makes you both feel secure without tying up? Too much of your resource is,
00:05:02 and with your unique situation, actually makes sense. This is one of the things that I work with my coaching clients on because we often end up with different amounts of money.
00:05:15 You'll also hear people talk about having a starter emergency fund and then a fully funded emergency fund, depending on where they are in different goals,
00:05:22 like paying off debt and other things. But let's right now, just talk about it in general, having some money set aside for an emergency is a good thing.
00:05:34 One of the things that I point out is once you get some money set aside for an emergency, by definition it cuts your emergencies in half.
00:05:43 And that sounds funny because at first you started thinking Wait I have fewer emergencies just because I have some cash and honestly,
00:05:50 I've seen that happen. I've seen it where, because you're also doing other things that cause you to pay attention and prepare and be more diligent,
00:05:58 you actually have fewer emergencies. But even if not, even if you have the same number of emergencies,
00:06:04 by definition you have half assed many because here's what happens right now. If you have no money set aside for emergencies and your car breaks,
00:06:13 you have a car transportation emergency and you have a financial emergency because you've got to figure out how to get the money together to fix the car.
00:06:24 But when you have an emergency fund, then by definition you only have the car emergency and all of the emotion that goes along with that.
00:06:32 It's still a bad situation. It's still rough. It's still something you've got to deal with. There's still a problem to fix,
00:06:39 but you have the money so that part of the problem isn't as big of a problem. Right now.
00:06:46 A lot of people are seeing the need for an emergency fund, but what happens if you get into that situation and you don't have an emergency fund.
00:06:56 Well, then you have to begin to think creatively. It's not necessarily about whipping out the credit card right away and just putting it on debt.
00:07:05 In fact, if this is a long term situation that may last for a while, that actually can make the problem worse instead of better.
00:07:13 It's about looking at your budget and thinking about what your priorities are and what can you give on? What can you cut out?
00:07:19 What can you give up in terms of expenses? It's also about looking at the income side and thinking to yourself,
00:07:26 What can I do to bring in income both short term and long term? Do I need get a different job or a new job,
00:07:33 or do I need to sell something all of these air possible? You need to think broadly and creatively about both sides of the equation,
00:07:41 the income and the outgo, and depending on what the emergency is, how much it's gonna cost, how long it's gonna last or could last get tells you how creative you want to be.
00:07:55 How far back do you wanna pull? Are you just paying minimums on debt or are you getting into a situation where perhaps you can't even pay on debt depending on what's going on in your life and how big of an emergency and how long it will last and how much money you actually have.
00:08:12 You could be doing either of those things. One of them is not right and the others wrong. It really depends on the particulars of the situation.
00:08:20 But regardless, what you want to do if you find yourself an emergency and you don't have an emergency fund,
00:08:26 is you immediately want to take a step back and reassess everything. Look, ATT, every expense. See what you can cut out.
00:08:34 Look at everything that you have available to you to bring in income and see what you can do. You immediately want to shift into action.
00:08:43 One of the things that I've seen happen time after time is people kind of get into denial. They lose a job.
00:08:49 They don't have an emergency fund, so they just keep living exactly the way they were living before. And they usually use debt to fund it.
00:08:56 They use credit cards and other things, and that debt begins to mount day after day after day, and then it's six months or a year before they actually get fully employed again.
00:09:05 And now, now all of that income is tied up trying to dig out from under the mess that they made would in reality.
00:09:14 If they would have cut things back quicker, they never would have gotten in his deep. Even if they use debt to fund what was left,
00:09:22 they still wouldn't have spent nearly as much money. So the key when you find yourself in an emergency without an emergency fund is to not pretend it's to recognize what's going on.
00:09:34 Dig in and take action immediately toe. Limit the damage. Now, on the other hand, if you find yourself in an emergency and you have an emergency fund,
00:09:45 then you can use the emergency fund to take care of the emergency again, depending on the timing and how long you think it's gonna last.
00:09:53 You may want to still limit expenses and look for additional ways to bring an income and not have to use the emergency fund It all.
00:10:01 But if it's a short term thing, just the car broke and you've still got your job and everything else is business as usual,
00:10:07 pay to fix the car and then put the money back in the emergency fund. It may take you a few weeks or a few months to do that,
00:10:14 but you can do it and then you don't sweat it at all. That's a wonderful place to be,
00:10:21 and you can get there anyone can. It takes time. It takes hard work. It's not easy,
00:10:26 but it is worth it. Thanks for listening. Thanks so much for listening to the inspired stewardship Podcast.
00:10:39 As a subscriber and listener, we challenge you to not just sit back and passively listen. But act on what you've heard and find a way toe.
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