Rainy-day Money

When I meet with people, one of the first topics we discuss is "emergency fund" money. I ask a few questions, such as, “Do you have any funds set aside?”, “Where is it located?”, and, most importantly, “What would trigger you to tap into this account?”

Having a strategy for how to pay for emergencies is a key part of personal finance. That's one of the many reasons I want people to feel comfortable with their approach. I want them to understand that an emergency account can also help them move forward with a more comprehensive financial strategy.

As you can see from the accompanying chart, households appear to be committed to saving for a rainy day. Checking accounts and currency held by households is just a tick over $4 trillion, a steady increase from less than $1 trillion in 2019.

A comfortable amount of money in an emergency fund largely depends on a family’s situation (two-income household or one, self-employed or an employee, etc.).  The fund can help pay for unexpected expenses, but it may also be flexible enough to cover other short-term needs. The important concept is to have a strategy and to understand the role the account plays.

If it’s been a while since you looked at your account or discussed your emergency fund, it may be time to revisit your approach. Remember, there are no incorrect answers to rainy-day fund questions. The only wrong answer is to go without an emergency expense fund at all.

About Terrell Dinkins, MBA, ChFC®, RICP®

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Terrell Dinkins, MBA, ChFC® , RICP® is an investment adviser representative of and offers investment advisory services through OBN Wealth Advisors, LLC, a registered investment adviser offering advisory services in the State of Georgia and other jurisdictions where registered or exempted. Main Office: 950 Eagles Landing Pkwy, Suite 216, Stockbridge, GA 30281. Tel: 404-723-9780. Website: OBN Wealth Advisors.