More Than Finances

All about cryptocurrency, all the time.


Emergency Fund Calculation

Most financial professionals would tell you that having an emergency fund is one of the first things you should establish when trying to get your finances in order. An emergency could occur as a result of a job loss, disability, or any other event that causes your source of income to be reduced or eliminated.

What may not be so clear is what the amount of the emergency fund should be, and how to go about calculating it. Different factors come into play, depending on your personal situation.

For instance, if there is only one breadwinner in the family, six to twelve month’s worth of expenses would be a safer bet than three month’s worth, since there is only one source of income for the family to rely on. However, if there are two income earners in your family, you could possibly survive with savings that will cover you for around three to six months. If one of you were to lose your job, you’d still be able to rely on the other source of income.

Furthermore, if your job is a more traditionally “stable” one, such as a nurse or IT professional, you may also only need a three-month emergency fund.

But if your job is not as secure or you don’t receive a steady salary, as is the case with a commissioned salesperson, you’d probably need an emergency fund to pay for six to twelve month’s worth of expenses. This would help you stay afloat until you’re able to find work again. And if you have disability insurance, but the payments don’t begin for six months, you would need an emergency fund to support you in the meantime.

So what should you include in your monthly expenses?

Your emergency fund should only include non-discretionary expenses. These are the necessary expenses that include, but are not limited to:

  • mortgage or rent payments
  • food
  • car payments
  • utility bills (water, gas, electricity, etc.)
  • insurance premiums

Things that should NOT be included are luxury items, such as Starbucks coffee, video games, eating out at restaurants, and other entertainment expenses. In a real emergency, you should just get by with the minimum until you get back on your feet.

So the simple way to calculate the size of your emergency fund is to total up your monthly non-discretionary expenses and multiply that figure by the number of months you decided your fund should cover you for. If your monthly expenses total $4,000 and you want the fund to last for six months, then your fund should have a total of $24,000.

Similarly, if you already have a savings account for emergency purposes, you can calculate how long that fund would cover you if you were to lose your source of income. So if you had $10,000 in your emergency fund and had $5,000 of monthly expenses, you would simply divide the emergency fund amount by the monthly expenses. In this case, your fund would only last for two months. If you wanted your fund to sustain you for six months, then you’d have to add $20,000 more.

Where do you place your emergency funds?

You should have your funds invested in an account that you can access easily. One of the best types are online savings accounts. These are accounts that are linked to your checking account, so that you can transfer the emergency fund money back into them in the case of an emergency. They pay a little bit of interest, and some banks even offer a bonus to open up the account. Furthermore, since they’re often insured by the FDIC, you can feel good that your money is in a safe place.


Social Security Disability Benefits – An Introduction

We’ve outlined the steps to calculate social security benefits you’ll get in your retirement before. Part of the formula takes into account your work history. But what if you can’t work? Can you still receive benefits if you’re disabled?

The quick answer is yes – but there’s a long list of criteria for qualifying. Here we’ll take a brief look at what you can receive if you qualify.
Read more…


Social Security Benefits for your Spouse

You may know how to calculate social security benefits for yourself when you retire. But did you know that when you retire, your spouse also receives benefits? As a retired worker eligible for social security, benefits for your spouse will be 50% of your benefits, if he or she retires at full retirement age.
Read more…


SIMPLE IRA – Rules, Contribution Limits, & Benefits

Most people working for a company today are probably familiar with the 401k retirement plan. But what isn’t as well-known is the SIMPLE IRA. There are some nice benefits to the SIMPLE IRA that aren’t available with the 401k. Let’s take a look at how the SIMPLE IRA works.
Read more…


Sales Techniques – How the Liking Rule Makes Us Spend Money

From Influence: The Psychology of Persuasion, we learn about the liking rule. This rule simply says that we most prefer to say yes to the requests of people we like. As a sales technique, the liking rule is used in many ways to get us to spend money. Here are two examples that show us how.
Read more…