When circumstances change, we must change with them.
A traditional emergency fund is enough cash to survive for three to six months. Being very risk-averse, in The Poor Man’s Guide to Financial Freedom I recommend holding enough cash to get you by for six to twelve months.
However, I’ve noticed that some in the ‘sphere are concerned about cancellation, rolling lockdowns, vaccine mandates and whatever may hit us next. They are saving for an emergency much greater than being downsized and spending a year or so out of work.
They want a fund sufficient to last several years – enough to get them established somewhere else, perhaps overseas, with a new career and a new life.
This is fair enough. I had the same idea and ended up having sufficient resources to survive two years (and counting) out of work during the Great Coof.
Some people assume they don’t need to save for retirement because their country has a national pension system. They might also be expecting a pension from a government agency like the police department, fire service or board of education. In addition, some people think they’ll never need an emergency fund because the government can help out with unemployment benefits, public health coverage, and anything else they may need. Let’s see what The Poor Man’s Guide to Financial Freedom has to say about that:
But won’t the government look after you?
Don’t bank on it.
We’ll come back to social security in a moment, but first consider this:
Imagine there’s a tiny island nation in the Pacific. Let’s call it Bananastan. It being a very quiet place, with most people meeting their economic needs through fishing and subsistence farming, not much trade takes place. In fact, over the whole of 2019 the only goods and services paid for were: Read More