Mini Talk: The Baby Emergency Fund | Ep. 8

• Tiffany introduces the mini-episode focused on emergency funds while she's attending FinCon 2019.

• Emergency funds are essential because without savings, paying off credit cards leaves you vulnerable to re-accumulating debt during emergencies.

Let's say, for instance, you don't have any money saved and you pay off your credit card. Well, an emergency comes up. You're going to have to run that credit card back up to where it was or worse in some cases.

• Tiffany follows the Dave Ramsey approach of saving $1,000 before tackling other financial goals, noting most emergencies won't exceed this amount.

I go by the Dave Ramsey rule... I like to have at least $1,000 saved before I start tackling anything else.

• Once debt-free and closer to goals, move from the $1,000 starter fund to the industry standard of 3-6 months of expenses.

• Tiffany keeps her emergency fund at Ally Bank to earn higher interest rates than traditional banks.

My current Ally savings is at, I believe, a 2.2%. And at a national bank, your average savings account is probably going to be like a 0.15.

• Online accounts require transfer time, creating a pause that helps distinguish real emergencies from impulse spending.

It takes a little bit more to get your money... That's good because I'm not instantly dipping in whenever I run into a emergency.

• Traditional banks offering 0.15% don't keep up with inflation, effectively causing savers to lose money daily.

It breaks my heart that these banks are only giving us like point one five in interest. Like that's not even keeping up with inflation, not even close.

• Tiffany encourages listeners to start building emergency savings before pursuing other financial goals to avoid future heartache.