126: How to Build an Emergency Fund That Actually Protects Your Family

Most emergencies cost more than $1,000.

In this episode, Jessica and Brandon break down what a properly funded emergency fund actually looks like and why it’s one of the first steps in any financial plan.

We cover:

• What counts as a true emergency
• How to calculate 6 to 12 months of expenses
• Why expenses matter more than income
• Where to keep your emergency fund
• Why you shouldn’t invest it
• How to automate your savings
• What to do if you feel behind

Whether you’re in a volatile industry, a dual-income household, self-employed, or rebuilding after a layoff, this conversation will help you create a clear, practical plan.

An emergency fund won’t make you wealthy. It keeps you from going into debt when life happens.

Start small. Automate it. Build the habit.

Resources mentioned in this episode:

• Get 50% off Monarch Money subscription
• Sign up with Ally
• 116: Five Signs You Need Financial Therapy
• 90: Rewriting Your Money Story with Financial Therapist Wendy Wright

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Money, relationships, and the mindset to master both. Hosted by financial advisor Brandon and his wife Jessica, The Sugar Daddy Podcast breaks down how to build wealth, unpack old money beliefs, and have real conversations about love and finances. Their mission? To help couples and individuals grow rich in every sense of the word: emotionally, relationally and financially.

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Transcript

Why An Emergency Fund Matters

Jessica 0:00

Did you know that most Americans cannot cover a$400 emergency? That's why having an emergency fund is more important than ever. Between inflation, layoffs, medical costs, home repairs, pet costs that were unexpected, having an emergency fund is no longer optional. It's foundational. In today's episode, we're diving into all the nitty-gritty details. Stay tuned and join us.

SPEAKER_03 0:25

Sugar Deddy Podcast, yo. Learn how to make the pockets grow. Five minutes of freedom's way a week, bro. Smart investments, money flow.

Jessica 0:36

Welcome to the Sugar Daddy Podcast, where we help you build a financial plan so that you can feel confident in your money. Hey, babe.

Brandon 0:47

Hey, how are you doing?

Jessica 0:48

I am okay. How are you?

Brandon 0:50

I'm good.

Jessica 0:51

So it's very timely that we are talking about emergency funds today because earlier this week I came home and we had a$514 vet bill for Remy, because we never get out of the vet for less than$400, and it was$514. And he has two, well, one like broken tooth and one shipped tooth, and they have to be extracted. And I feel like it's going to be a small mortgage payment, and I'm super ticked off about it.

Brandon 1:24

Yeah, it's always something. And that's why this episode is about making sure that you have a properly funded emergency fund and what that actually means.

Jessica 1:32

Yes, because the one thing that we know for sure is that the emergency will happen.

Brandon 1:38

Oh, yeah. It's not a matter of if, it's a matter of when.

Real-Life Surprises And Rising Costs

Jessica 1:41

Yes. It's always, I mean, in December, I had a flat tire twice. Remember, we got back from Aruba and my car was literally tilted in the garage. And I was like, oh my gosh, what's happening? And luckily we were able to just patch it. But in my head, I was already like.

Brandon 1:59

Well, no, I mean, we patched it for the I mean, we actually took it back. We did patch it.

Jessica 2:03

Didn't we patch it?

Brandon 2:04

We plugged it.

Jessica 2:05

Plugged it twice. Yeah. So those were Yeah, that was your second.

Brandon 2:08

That was my second time in a matter of a month.

Jessica 2:10

In yeah, in less than a month. But I'm what I'm saying is in my head, I was like, oh my gosh, how is how much is this tire gonna cost?

SPEAKER_04 2:16

Yeah.

What An Emergency Fund Is And Isn’t

Jessica 2:16

You know, because like the things happen. Or then like we had something happen with the dryer, and we were like, oh no, are we gonna be able to fix it ourselves? And y'all, I will say one thing about Brandon, he loves him some YouTube university, and we were fine. And I'm very, very grateful. But like it's always something. If it's not the car, then it's an appliance. If it's not an appliance, it's a pet. If it's not a pet, it's a it's always something. And we all know this to be true. And then on top of that, we have rising costs of everything, mass layoffs happening all over the place, job uncertainty. Like it is just, I feel like we're constantly just on edge, waiting for the next thing to happen because it's it always feels like it's right around the corner.

Brandon 3:00

Well, the thing is too, is that an emergency fund is one of the foundational building blocks of a financial plan. You know, a lot of the times people think about, I think the thing, honestly, I think the main thing that when people hear the word financial planning, they think about investing.

SPEAKER_04 3:12

Yeah.

Brandon 3:13

And investing is a long term. Like you're not going to get rich tomorrow or even next year off of investing for 99.999% of people. All right. So emergency fund is a key fundamental part because emergencies happen all the time. So you need to build this up so that the rest of your plan works. Because if you can't get through an emergency tomorrow, you know, say if something happens, you need a thousand, two thousand dollars, you can't get through that emergency tomorrow. What good does, you know, investing that's actually going to take you 20, 25 years to get to your goal? What good is that when you can't get through an emergency that could happen tomorrow?

Jessica 3:46

Right. Well, and it's, you know, I mean, so much of this, and I hate to say it, is just not fun. No, I mean it's just not it's not a fun way. It's not fun to put away money. You have to budget for your emergency fund, right? Isn't it it is an expense to put away money for savings. Yes. That's what it is. You have to look at it that way. It is an expense, just like your water bill, just like your light bill, just like your car insurance. You have to plan for it, you have to put it away, and it's it's an expense that you need to account for. But just like, I mean, I don't, even though I know future Jeffs will thank me, I don't love seeing money come out of my paycheck for anything, whether it's taxes, whether it's social security, definitely not social security. I'm like, give me my money back, you know, whether it's my going towards my 401k, like I don't like seeing any money come out of my paycheck, but I know that it's it's like that necessary evil.

Brandon 4:43

Yeah. And the thing is, like, you know, the first step as far as for an emergency fund is you need to make sure you understand what emergency fund is for and what it's not for.

Jessica 4:51

Ooh, tell us.

Brandon 4:52

That's the first step. So define what an actual emergency is. And we've already talked about a few of them, you know, job loss, medical issues, you know, urgent repairs to say your home, your car, things of that nature. Now, what an emergency fund is not for is vacations, gifts, the cute boots that are on sale. And then even in a scenario, a planned expense. So, for example, like if you're wanting to do a home repair in a year or two from now, you could start, don't go into your emergency fund. Start to plan for that. It's not something that's urgent and just popped up. This is more of a want and something you want to do. Plan for it. The emergency fund is for those things that pop up that are unexpected and you need to address immediately.

Jessica 5:31

I feel like you said that because I want to get the house painted and our quote was$2,750.

Brandon 5:36

That isn't why I said that. I wasn't even thinking about that. But that does make sense. That does fall into that because that could be a planned expense.

Jessica 5:43

It's a planned expense, not an I mean, yeah, in my head, I'm like, but we have it. We can just move the money. But no, that's not what that's for. And getting the house in the painted interior is not an emergency.

Brandon 5:55

And the main reason behind defining what an actual emergency is and what is not an emergency is because when you're in the process of funding an emergency fund, if you're constantly using the money for things that aren't emergencies, then you kind of feel deflated. You're like, what is the purpose of this emergency fund? It feels pointless. It's like, yeah, because you're not doing it right.

Jessica 6:15

You're doing it wrong. Yeah, but people have a hard time taking money from their emergency fund even when they have emergency.

Brandon 6:22

That is true as well. You have people on one side and you could completely swing the pendulum to the other side, where you have people that are such Uber savers that, you know, when a proper emergency does happen, they're hesitant to use their emergency fund or they feel deflated because they're having to use their emergency fund. We're like, this is what it was for. This is what you this is This is what this specific bucket was for.

Jessica 6:41

Yeah. Okay, so let's go into kind of the basics. Where should people start?

Brandon 6:49

Well, first you determine how much you should have in your emergency fund.

How Much To Save And Why It Varies

Jessica 6:52

Okay.

Brandon 6:53

And you know, an easy rule of thumb could be, you know, anywhere from six to twelve months worth of expenses. Now, listen to when I say expenses. I didn't say income.

Jessica 7:04

Okay.

Brandon 7:05

Six to twelve months worth of expenses. Now, where the nuance comes is individual circumstances and your personal feelings. So, for example, um, are you a dual income household that, you know, if one person loses a job, maybe the other person can still cover most of the bills? That will make a difference in regards to how much you need. Are you a family of four and you're have a single income where everybody is dependent upon one income? Then you might want to have a little bit more in your emergency fund than that six months and lead closer to that 12 month. Um, are you a business owner, an entrepreneur? You might want to have a little bit more in your emergency fund. Are you someone that's in an industry that has high turnover? Maybe you want to have more in your emergency fund. And then also just comes personal preference. You know, someone might just want to have a little bit more, like based upon their needs, maybe they only need six months, but like their comfort level is like maybe I need eight or nine. I just feel more comfortable. So you can have that nuanced conversation. But the first thing is determining how much do you need, because that's going to be the goal that you set up for funding it. So you determine what is my ultimate goal, and then you simply can just do the math based upon your budget on how much you can contribute on a monthly basis towards that goal and how long it would take you to get there.

Jessica 8:17

I think one another call out too is depending on what your where your income comes from, are you an entrepreneur? Are you, you know, in a volatile industry? Like I work in tech, and every single day, you know, that I log into LinkedIn, I see that, you know, another company's done mass layoffs. So if you know that you're in a field where it's going to be difficult to get rehired, things are taking significantly longer than they used to, you might want to add a little bit of extra padding in because you want to account for that nuance of the industry that you're in. Now, if you're you might be in an industry where maybe it's super niche, you can get hired the next day somewhere else. You know, that's amazing and that's great. But those are all things I think that you need to consider.

Brandon 9:08

Yeah. And I think we also need to, you know, dispel some of the myth out there because like what?$1,000 is not an emergency fund. It's a starter fund.

Jessica 9:18

Oh, yeah.

Brandon 9:19

But that is not an emergency fund. That is a place where you can maybe start, but most emergencies are going to cost you more than$1,000.

SPEAKER_04 9:27

Right.

Brandon 9:27

Now, what I do unfortunately.

SPEAKER_04 9:29

Yeah.

Brandon 9:29

But what I do want to preface with that is that the main issue when it comes to having an emergency fund is not having too little of emergency fund. It's actually waiting too long to even start one. So even though I'm talking about$1,000 is not a fully funded emergency fund, it is a starting place and it's better than nothing. So even if you don't have a lot to start putting towards an emergency fund, put something in place because it's going to be significantly better to have something than it is to have nothing.

Jessica 9:56

Yeah. So don't be the person that says, well, I can't put a$500 or$1,000 into the emergency fund every month. So I'm just not going to do anything. Instead, be the person that says, hey, I have$20 that I can put into this emergency fund this month. That's what I'm going to do. Or, hey, this expense was less than I thought. So I have a little bit of money left over. I'm going to add this to my emergency fund.

Start Small, Avoid Debt, Build Habit

Brandon 10:19

And also, like a little bit of a sidebar here with that is the main purpose of the emergency fund is obviously to fund an emergency, but the even further step is so that you can fund it fund an emergency so that you don't go into debt.

Jessica 10:32

Right.

Brandon 10:33

So that's one of the main reasons is that, like, you know, if you don't have a properly funded emergency fund, maybe you have to take out a loan for something that's unnecessarily in. Maybe their rates aren't favorable to you. You might actually end up racking more credit card debt in that scenario. So the emergency fund is plays a bigger part in the financial picture than just, you know, having this lump sum of money sitting there.

Jessica 10:52

Right. And speaking of having the money sitting there, your emergency fund should be sitting in a high yield savings account. We will link our favorites. Um the rates kind of are not as great as they were last year.

Brandon 11:06

Still better than your, you know, standard brick and mortar old school bank.

Jessica 11:10

If your money is sitting at the Wells Fargo and the Bank of America's and even, you know, at Chase or wherever, you are losing money. So get at least right now, it's like about three and a half percent. Sometimes it's up to last year, we were getting mid-fours, which was really nice.

Brandon 11:26

You need to keep it in a high yield savings account. There no other place you should have.

Jessica 11:30

Non-negotiable. We'll link our favorite.

Where To Keep The Money

Brandon 11:32

Because also the thing is here is that the problem that I also often run into is that people need to visualize their various buckets of money to have different purposes. Because what ends up happening is that people sometimes are always trying to maximize and they're viewing all their buckets together in regards to maximizing. And by maximizing, I mean growth. The emergency fund bucket is not meant for growth. So you need to get that out of your mind. It is not a growth bucket. That is not your investing bucket. It's not too many people that are like, oh, you know, I want to invest some of that or whatever. I'm like, well, then it's not your emergency fund bucket. That's your investment bucket. The emergency fund bucket is there for the emergency, rainy day, something happens and it's urgent. This is not meant to invest. Because also people need to take into account that when it comes to investing, the basic rule of thumb is if you need it in five years or less, you probably shouldn't invest it. All right. Because the idea with the emergency fund, if you invest it and then say, you know, the market's down and now you need money, now you have less money. So you need to really think about the specific purpose of um each bucket of money that you have and not conflate them all together.

Jessica 12:36

Right. I like that. I because people do get confused or everybody's in the maximizing, maximizing mindset. And you're right, that's not what the emergency fund is for, because it is not an investment of any kind. It's not an investment vehicle.

Brandon 12:52

No, it's not an investment, period. Yeah. That's not the purpose of your emergency fund bucket.

Jessica 12:56

Yeah.

Brandon 12:56

And I've had that, like and the conversation comes up more often than not because once you have a decent income and you have more expenses that you're trying to cover, you're going to have a higher emergency fund. So sometimes people are like, you know, I hate seeing$60,000,$70,000 sitting there. And I could be investing. And I'm like, that's not the purpose of this bucket. And you need to, you know, wrap your mind around, where you shape your mind around that. Because most of the time, too, is that like, you know, normally most people's investment vehicles have restrictions to access. So if you have this money someplace else and you have a restriction to access it, that even that presents another presents another issue. Yeah. So it's really, you know, the proper mindset and thinking about everything from a planning standpoint as a whole picture and not just an individual segment of it.

Jessica 13:42

For people who are listening who are like, yep, you're right. I need to start my emergency fund. How do you recommend people get started to where it doesn't feel overwhelming?

Brandon 13:52

This all starts back to the basics of pretty much every conversation we have is understanding your budget. Okay. Understanding your cash flow, how much money you have coming in, how much money you have going out, and where can you maybe reallocate some of that money to better benefit your goals. So you want to understand how much can I comfortably um contribute to an emergency fund on a monthly basis? And the only way you're going to know how much you can comfortably contribute is by understanding your budget.

Jessica 14:20

Okay.

Brandon 14:21

There's no way to do it. Because, like, I don't like the idea of just guessing. Because, for example, normally in guessing, you're probably undershooting.

SPEAKER_04 14:28

Yeah.

Brandon 14:29

Because if you're like, oh, I can contribute 200 and you're doing it, more than likely you can contribute more.

Jessica 14:34

That's true.

Brandon 14:35

So you want to really take a look at where all your money is going and have a specific amount that you know you can contribute in pushing that. Because also the thing is, too, is when you're deciding how much you can contribute on a monthly basis, you can obviously then do the math based upon what you're currently contributing, how long it's going to take for you to have a fully funded emergency fund. And if you want to, you know, speed up that process, then you're going to need to contribute more. But it all comes back to determining how much you can contribute by looking at your budget. Now, with that being said, if you only have$25 to contribute,$20 to contribute, do that. It is better than doing zero. And I cannot stress enough that something is a thousand times better than nothing. And that's where people need to get that head trash out. They're like, oh, I don't have enough. I can't really do anything. I don't care if it's$5.$5 is better than nothing.

Jessica 15:24

Well, and you talk a lot about building the habit.

Brandon 15:26

Yes.

Jessica 15:27

So right now it might be$5 and you can do that monthly. You can automate, you know, we're big on automate, automate what you can. So that way it's not another manual task that you have to do. So, you know, whether it's coming straight from your paycheck, once it hits your, you know, your account, maybe you have it automatically coming out on the same day every month, et cetera. But you're building that habit and working that muscle of learning how to automate your savings. You know?

Brandon 15:53

And I think automating is the key. It's like once you've looked through your budget and you determine how much you can comfortably contribute to it on a monthly basis, automate it to make it so much easier for you and also to ensure that it happens.

SPEAKER_04 16:04

Yeah.

Brandon 16:04

Now, for example, people that maybe have a regular income, that might be a little bit more difficult. But we've also had other episodes where we talk about where maybe you do a little bit less that you know you can do, and then you might have to contribute additional amounts manually when they come in. So, for example, like, you know, if you're someone that works in um a sales position, when you have your commission, your bonuses, maybe you're putting more from those into the emergency funds, but you have to do that manually. But then even, you know, for example, you know, those individuals that are getting larger tax refunds, using that strategically to put towards, you know, building up your emergency fund as well.

Budgeting, Automation, And Variable Income

Jessica 16:38

Yes. Oh my gosh, the tax refunds. Yeah, please don't go on a shopping spree with those. I mean, that's a whole nother episode of what you can do with your tax refund. But yeah, and and one thing that we we had an episode on earlier this year already is Monarch money. We are loving, loving, loving Monarch. They are not paying us to say that yet. Uh, hey Monarch, holler at us. Uh, we love your app. But Monarch is great, great user interface, great user experience, super easy to set up. You can put all of your accounts in and have a really clean picture of the money that's going in, the money that's coming out. Um, and it'll help you not have to do it manually, right? Because nobody well, I don't want to live in a spreadsheet. That's not how I like most people don't.

Brandon 17:23

No, there are some of the weirdos out there.

Jessica 17:24

There are people, no, there are people who are.

Brandon 17:26

I have some clients that love their spreadsheets.

Jessica 17:28

Yes, yes. And that's fine. You do you, but they also use Monarch.

Brandon 17:31

So they like that as well.

Jessica 17:32

Yeah. And then, I mean, you know, you can look at your cash flow that way and then determine what you can put into your high yield savings account for your emergency fund. I do want to go back and ask you as people are looking at their expenses, because this is for an emergency. If we're thinking about a layoff, are you calculating expenses for how we're living now with like our housekeeper and the Netflix and the Hulu and the this and the that? Or are you extracting?

Brandon 18:03

So you can tier it.

Jessica 18:04

Okay.

Brandon 18:04

So for example, you can kind of determine what's bare minimum, right? You could yeah, you could determine your bare minimum. So let's just say hypothetically your bare minimum is 40,000. So you have that first set goal of like this is the bare minimum to, you know, have the basics of all the things we need, like, you know, our utilities, mortgage, stuff like that. Yeah. Then you can have a second tier where like, oh, you know, you know, instead of 40, you know, 50,000 is gonna allow us to keep, you know, the luxuries, the gym membership. And then our 60,000 is gonna allow us to really kind of keep the standard life that we have and not have to necessarily worry for a certain period of time. So you can tier it, but like I said, it's first of all defining, you know, what you want that emergency fund to look like.

Jessica 18:41

Yep.

Brandon 18:42

And that's gonna that can vary because some people are, I mean, one of the biggest things is that most people are like, you know, well, if you know, if I we both get laid off or something like that, then like obviously we're gonna go bare bones.

SPEAKER_04 18:51

Right.

Brandon 18:52

But then sometimes you might have to be who you are real as a person, is are you gonna be able to just go straight bare bones?

Jessica 18:57

Right, right.

Brandon 18:58

So you had you can like you can tailor that to each individual, and there's some nuance there.

Tiered Expenses And Severance Nuance

Jessica 19:04

Well, and as a, we did an episode a while back because I was part of a mass layoff at a Fortune 100 tech company. Um, I did end up on garden leave. I had, you know, a very nice severance. I was very grateful. But we, our goal was honestly to try to not use the severance and to take that money and put it into our emergency fund. Um, however, we were kind of thinking about okay, what can what could we get rid of versus what maybe luxuries would we keep? And one of the things that we landed on was we're gonna keep our housekeeper because, you know, I was gonna be job searching, I was gonna be interviewing, I was gonna be prepping, et cetera. And I can't do anything mentally in a house that is not the way I need it to be. And so keeping our housekeeper was going to ultimately benefit me in my job search and in my, you know, mental capacity and mental planning and all of those things. And so I think even thinking through those things, like I can go without TV. We barely watch TV anyways, but I need a clean house.

Brandon 20:10

And the key thing is we talked about it. Yeah. So we talked about it and had a plan in place for what that would look like. And we built our emergency fund and our plan of action around that. Right. Like you said, you know, that's a good point to bring up when it comes to the emergency fund is also what type of severance package are you for the most part? I'm not gonna say guaranteed because there's always that possibility, but what is a strong possibility of if you did get laid off from your job, do you have a you know a severance package?

Jessica 20:35

Or what does your contract say? Are you getting one month for every year of service? Are you do you know you're gonna get automatic six months right out the gate?

Brandon 20:42

I mean, you know, what I still like to do in those scenarios is that I still like to base it upon, because like I said, none of those are guaranteed.

Jessica 20:50

Right. They're nice to have.

Brandon 20:51

Because like I said, you could have an amazing severance package that's in your contract, but if the company goes under, it doesn't matter. They don't have the money.

Jessica 20:58

Yep.

Brandon 20:59

So I always like to base it off of even if you have a severance package, let's build it as if you don't.

Jessica 21:04

Yes.

Brandon 21:04

And then if something does happen and you do get laid off, you have the emergency fund and you have some extra, but then also we could just bank some of that money to do something else with once you find another job. Yeah. So having a little bit more an emergency fund is never going to be terrible in comparison to not having enough.

Jessica 21:19

Right. Exactly. Exactly. I feel like we covered most of the the like the meat. Are we missing anything?

Brandon 21:28

Um, I wouldn't, like I said, we've already talked about like the main thing as far as where you need to keep it.

Jessica 21:34

I know savings.

Brandon 21:35

Because I've I have met people. I have met people who have kept it in their checking account.

Jessica 21:39

Oh my gosh. In your check, I listened.

Brandon 21:43

Or just like a regul or even just like a regular savings account where you're getting like 0.02%. And I'm like, uh but you know.

Jessica 21:50

Cool. Let's just very briefly, I'm gonna give you like a minute on this. What about the people who have too much in their savings?

Brandon 22:00

Yeah. So I did say before, like, you know, having too much is not going to be bad. It's not bad. Okay. It's better than not having enough. However, then it comes into the play where now your money could possibly have been better allocated to grow for you. So for example, if we've let's say we're even on the, you know, the further end, you get a 12 months, 12 months of expenses. Let's just say that equals$100,000, but you have$250,000 sitting there. And you don't have and you don't have anything specific that you're going to do with that additional$150,000 in the next five years. Now that money is really just losing purchasing power. And what I mean by that is that in order for your dollar today to be worth the same dollar a year from now, it needs to keep up with inflation. Now with a high yield savings account, you're going to get the highest interest rate you really can on safe money. And by safe money, I mean you're not, you don't have a potential of losing it, but you're not going to keep up with inflation. Inflation is still going to be a little bit higher. So you're still quote unquote losing a little bit of money, but you're trying to minimize the amount that you're losing. But if you have an additional$150,000 that was just sitting there, you were just losing money because you could have invested that in that time frame and it could have grown for you significantly more.

Jessica 23:12

Well, and especially, I think the important part there is there are people who need$250,000 or$300,000 in their emergency fund because they have multiple properties or, you know, like if that is part of what they need for their expenses, then great, have that. But if that is not what your expenses need, then you're ultimately losing money.

Brandon 23:32

Yeah. You could like I said it would be better sort of to invest that.

Jessica 23:36

What a good problem to have though.

Brandon 23:37

But then also, like, I would look at the psychology behind it. You might have to do some internal digging to understand, like, if you possibly know that you don't need this much money or literally support it. But you still have it there, why? And you need to address that because I like I said, we always talk about also we're big on the behavioral finance aspect, not just the you know, the black and white numbers. Like, why are you doing what you do with your money or why are you not doing what you should be doing with your money? Yeah. So you might need to look at that.

Jessica 24:05

Um, that you can go back and listen to because you know, there's so much more to our money than just the numbers.

Brandon 24:11

Aaron Powell But at the end of the day, I'd much rather have that problem where I have too much money than one than I don't have any or I don't have enough.

Jessica 24:18

We're not feeling sorry for you if you have$300,000 sitting in savings and you're like, oh, I don't know what to do.

Buckets, Psychology, And Peace Of Mind

Brandon 24:23

Also, one additional call I want to make for individuals is that, like we said, you should have it in your high high yield savings account. But one of the things I often run across is like, oh, well, should I have multiple high-yield savings accounts? Because you know, I have one for my emergency fund, but then I have for my other savings. And I'm like, in all honesty, what you should do is choose a high-yield savings account such as Ally, which allows you to bucketize. So you don't need multiple high yield savings accounts, but you can have one and it has sub-accounts and you can name the sub accounts. So, for example, if you have$100,000 in total in the account and you're like, I need a$70,000 emergency fund, you can have$70,000 as a bucket for your emergency fund and have it labeled. You can clearly see it as separated. And then the other$30,000, like, you know, I have$20,000 for a home improvement, I have$10,000 for my kids' braces. And you can honestly bucketize those and label them. And I honestly, it sounds silly, but literally that little change, I've done it for so many clients, and it's like life-changing for them to just be able to see, instead of seeing a large lump sum of money and having to internally in their mind determine what the amounts are for, as compared to simply seeing it clearly on on the computer screen that like, this is what this bucket's for, this is what this bucket's for. You'd be surprised at how um much of a mental shift that can have for you.

Jessica 25:33

It's the little tweaks that make the biggest difference.

Brandon 25:35

Yeah.

Jessica 25:36

Yeah. Well, because seeing, let's say it is$100,000. Let's seeing$100,000 and you're like, well, what is that? Okay, that's emergency, that's the pet fund, that's the the the it's hard, right? And then every time you look at that account, you're like doing the mental math of how much goes to this bucket versus that. So just yeah, create the buckets and label them.

Brandon 25:55

Yeah, and I also just at the end of the day, like it's the psychological aspect. Like we said before, like you need to really understand what your buckets of money are for and not conflate all of them together for just simply maximum growth. Emergency fund bucket is not gonna make you rich. The idea is that it keeps you from going backwards.

Jessica 26:12

Yes. Yeah. And you know what? Again, you know, we've had so many episodes about life insurance, emergency funds, like all these things, all of these protections, they're gonna help you sleep better at night. They're gonna help give you a peace and a calm. And that's ultimately what what we want for you. We want your money to work for you in a way that you can find peace and clarity and a sense of calm and security that you are missing when you don't have those protections in place. And so remember that every little bit counts. You can go to your employer, see about your payroll. Sometimes you can automate, you know,$20,$25 coming out of your paycheck directly and routing that into your high yield savings so you never even see it. It's automatic. And then the next time you open that account, you're gonna be surprised at how much is in it. Even when it you're only putting in, you know, this amount or this amount, it doesn't have to be thousands of dollars a month for it to make a difference. And anything in your in your emergency fund is better than nothing. So give yourself some grace. If it can't be hundreds of dollars or thousands of dollars a month, that's okay. Build the habit of automation, build the habit of taking a little bit of something from each paycheck and putting it aside for your future self because the emergency will happen.

Brandon 27:32

And this should also be one of your early steps in your financial planning. I want to preface that. I didn't say that before. This should be one of your early steps.

Quick Wins, Tools, And Next Steps

Jessica 27:39

Okay. Excellent. Well, we will link our monarch in the show notes because you can get 50% off for your first year. It's absolutely worth it. We love Ally. Um, we'll be linking that as well. You can use the buckets in Ally, which is really nice. Um, don't spend, you know, more than five minutes finding a high yield savings account. I know that there's people that are like, oh, I'm gonna move all my money over here to get an extra 0.5%. And if you want to do that and you have time, that's great. But open up one high yield savings account, designate your buckets, move your money in there, be done, and move to the next step. Move to the next step of this list of financial to-dos that we're giving you every single week. So don't let it rack your brain. Okay. Again, if you have not yet left a five-star rating or review, please make sure you do that. It helps other people find our podcasts. We know you want to share this message with other people. So thank you in advance. And we will see you next Wednesday. Thanks for listening. Don't forget, Benjamin Franklin said, an investment in knowledge pays the best interest. You just got paid. Until next time.

Ratings, Community, And Disclaimers

SPEAKER_03 28:45

Sugar Daddy Podcast, yo. Learn how to make the pockets grow. Finance and freedoms where we grow. Smart investments, money flow.

Jessica 28:55

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