How to Boost Your Emergency Fund in a High Interest Rate Environment, Ep #116

<p>Emergency funds. Cash reserve funds. Safe money. They’re all the same name for money that you need to set aside for—you guessed it—<em>emergencies</em>. As interest rates continue to climb to combat inflation, what should conservative investors do? What opportunities should you take advantage of with rising interest rates? Should you look at bonds or fixed-interest investments? Higher interest rates make it easier for conservative investors to earn interest on their emergency funds. Learn what I mean by that in this episode of Retirement Made Easy!</p> <h2>You will want to hear this episode if you are interested in...</h2> <ul> <li>[6:21] Don’t forget to check out RetirementMadeEasyPodcast.com!</li> <li>[8:30] The basics of an emergency fund (and why it’s so important)</li> <li>[10:57] The difference between an emergency fund and a sinking fund</li> <li>[13:31] What’s interesting about the rising interest rate environment?</li> <li>[15:28] What you need to know about the bucket strategy </li> </ul> <h2>The basics of an emergency fund (and why it’s so important)</h2> <p>An emergency fund is whatever you keep in your checking account, savings account, or money market account that is <em>liquid</em>. It simply means that you have immediate access to money that’s set aside for emergencies. Sadly, many people <em>don’t have emergency funds</em>. They live paycheck to paycheck and when they have an emergency, it goes on their credit card. Then they pay off the credit card when they get a bonus or have more money coming in.</p> <p>Your cash flow situation in retirement is much different. Putting emergency expenses on a credit card won’t cut it. So what should you have saved for emergencies? At least 3–6 months of living expenses (and some people even prefer 12 months). If you live on $5,000 a month, 3 months is $15,000. 12 months would be $60,000. I’ve met people with $500 in their emergency fund and I’ve met some with $500,000 in it. </p> <p>The point is to be able to cover large unexpected expenses such as medical