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The BEST Place To Save Your Emergency Fund - YouTube
Channel: Jarrad Morrow
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if there's one thing that I hate its
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having cash just sitting around and
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getting destroyed by inflation in this
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video I'm gonna go over some options of
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where you could put your emergency fund
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money while you were in debt and even
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after if you want to know how much to
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save for an emergency fund then I made a
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video on that topic I'll throw a link
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down in the description for you to check
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out after this video hey I'm Jared from
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debt-free blueprint where I show awesome
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people like you how to get out of debt
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and create freedom through your finances
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using the debt free blueprint whether
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you were in debt or out of debt will
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determine where you save your emergency
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fund my goal in this video isn't to sway
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you towards one way or the other
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it's worked it's to present to you the
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options that are out there and give you
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my thoughts on each make your own
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decision based on what sounds more
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interesting and fits with your specific
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financial life as you watch this video
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let me know in the comments down below
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which one of these sounds like the best
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option for you and why I'd love to hear
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your thoughts just to give you an idea
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of how this video is gonna be structured
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I'm gonna list an option and then I'm
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gonna talk about it if you're in debt
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and then if you were out of debt the
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first and easiest option for all of us
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is our local bank while you're in debt
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you usually don't want to take on too
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much more risk since you're currently
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overflowing with risk through the debt
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that you were paying off if all this
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money is for is to help you float by
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while you're slamming all of your other
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available cash towards your debts then
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this is one of your better options
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because you know that if you put in
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$1,000 and that $1,000 will always be
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there in times of need well in the
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process of paying off your debt if you
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were out of debt then keeping an
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emergency fund in your local bank will
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work just fine this probably isn't your
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best option though but there's nothing
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wrong with keeping your money here if it
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helps you sleep at night keeping your
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money here will all depend on if you are
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more risk averse next we're going to
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talk about high-yield online checking or
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savings accounts now a few things to
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keep in mind with either of these two
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options the interest rate will usually
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be higher for an online checking account
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than it would be for a checking account
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at your local bank number two the
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interest rate for the online savings
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will usually be higher than the online
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checking account
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I'm currently receiving roughly 1.75
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percent interest on my money through the
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online savings account number to be keep
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in mind that there are federal
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regulations surrounding the amount of
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transactions that you can make per month
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with an online savings account or with
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any savings account for that matter
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you're allowed 6 transactions or less
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per month before being charged generally
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you won't get charged for transactions
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at places like ATMs in banks or some
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stores do not fault the banks for this
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because they're just following the
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federal law it's basically to prevent
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you from constantly taking your money
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back and forth between a checking and
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savings account this usually isn't a big
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deal though because six transactions is
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a lot and we're talking about your
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emergency fund here if you find yourself
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hitting or going over those six
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transactions then you may want to look
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at moving that money into a checking
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account if you're in debt then I like
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the online savings account option the
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best I agree that it's still not the
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best return on your money but this isn't
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something that you need to be worried
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about with your emergency fund while you
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were paying off your debts the goal for
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your emergency fund while paying off
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debt is that the full amount will be
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there when you need to use it you might
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be worried that you won't have have
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access to the money like you would if it
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was at your local bank I agree but
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nowadays you can get this money
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transferred into your local checking
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account within a couple business days
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some of these online banks also offer
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debit cards as well if they don't then
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you can just use a credit card to charge
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your emergency fund amount then pay it
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off once the money is moved from your
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online checking account to your savings
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account at your local bank savings or
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checking account at your local bank with
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a credit card you have 30 days to pay it
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off so that's more than enough time to
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get the money transferred from your all
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mine cap line account to your local bank
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account to pay the credit card all yes
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you heard me correctly I'm actually okay
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with credit card use as long as it's
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paid off at the end of every month and
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it's used responsibly being responsible
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with your finances gives you more
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options like using a credit card to take
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advantage of the points that you get if
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you are someone who is
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out of debt and a little more
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risk-averse then this is probably the
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best option for you specifically the
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online savings account if you've gotten
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this far in your financial life then you
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have three to six months worth of an
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emergency fund saved up since that is
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such a large amount you could you most
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like most likely will not need access to
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that full amount if something goes wrong
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the only time you would need access talk
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to all of that money is if you lost your
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job or some other huge emergency
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happened if that happened and you could
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just transfer the money from your online
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account to your local account one month
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at a time until you find the next job or
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get out of that specific emergency this
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is actually where I keep a large portion
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of my six-month emergency fund I'll
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throw a link down in the description of
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which bank I currently use next is
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invest in your emergency fund what you
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shouldn't invest your emergency fund
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this is one of the more risky things to
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do with your emergency funds but wait a
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minute to hear how I think that you can
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mitigate some of the risk if you were in
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debt then there is too much risk
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involved in going this route finish
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getting your debts paid off then let's
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talk about where you may want to put
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your emergency fund in the future if
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you're out of debt then you are in a
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position to take a little bit more risk
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there are ways you can invest your money
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in a safer way than just putting them
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into a single stock I would never
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recommend you putting your emergency
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fund in a single stock no and hell no
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let me put a little disclaimer out there
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now I'm not recommending that you do
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this if you don't feel comfortable doing
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this then please keep your money
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somewhere safe like the things we
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already talked about I'm a huge
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proponent of investing in low-cost index
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funds while there is always risk
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associated with investing your money in
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the stock market if there was ever a
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time to do it it would be when your
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debts are paid off and you're in a
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financial position to potentially risk
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losing some to gain some I wouldn't
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recommend investing your whole emergency
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fund that would just be stupid
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not smart here's what I'm in the process
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of doing with my six-month emergency
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fund I want to give myself a chance to
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beat the inflation right or possibly
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make some extra money in the process
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I also want to keep my emergency fund
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somewhat safe as well so how can I do
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both
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I'm going to be investing in a small
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portion of my money my emergency fund
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and keep a larger portion of this in an
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online savings account the portion I'd
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be investing would be about a 60/40
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split with the larger portion being
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invested in bonds another real reason I
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feel comfortable doing this is because
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I'm pretty darn financially secure and
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have a stable job I'll tell you now that
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if it happens if I happen to lose my job
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tomorrow and I wouldn't be holding my
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money in any investments like this I'd
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move it all to the online savings
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account I've actually thought about
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documenting this process by making a
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monthly update video to let you know
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what's going on with that part of my
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emergency fund that I invested that way
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you can see whether it was a smart move
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or not let me know in the comments down
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below if you'd like to see this if you
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do then once those videos are created I
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will throw a link in the description of
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this video so you can follow along now I
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would be investing this part of my
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emergency fund into a taxable account
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and one thing to always keep in mind
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when investing in a taxable account is
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that you will pay capital gains taxes on
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any games you have in that investment
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when the money is withdrawn for example
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if I invested $1,000 and withdrew the
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money once the total was at $1,500 then
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I would pay capital gains tax on that
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$500 game another thing to know is that
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you are taxed at a higher capital gains
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rate if you sell the investment within
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12 months of purchasing it you pay a
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lower capital gains rate once you sell
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the investment after 12 months figuring
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out where to put your emergency fund is
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the easy part
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the more important part of an emergency
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fund is actually having one if you don't
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have yours fully funded then let's get
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it going because it's not a matter of if
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a financial emergency is going to happen
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to you it's when that emergency is going
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to happen feel free to sign up for the
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money management course waiting list
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where we talk about things like this
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well link is in the description make
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sure to smash that thumbs up button and
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pick up your FREE copy of the debt free
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prep workbook I love to have you as a
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subscriber
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speak and start getting you to the point
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where you are financially free I'll see
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you in the next one friends a do
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