Your Portfolio's MVP

This year the Philadelphia Eagles won the Super Bowl. As a lifelong fan, it has made the years of frustration worth it. The win was never a sure thing though. Two months ago, our young star Quarterback Carson Wentz was sidelined with an injury. All hope was lost and local talk radio shifted to how the team will be even better next season. This year was lost and we were ready to move on. Fortunately, that wasn’t the case inside the locker room. Hope was not lost by the backup quarterback, the beautiful giraffe, Nick Foles.

So what is your beautiful giraffe? What happens if you lose your job? Where does the cash come from if your car breaks down? How does the mortgage get paid if your healthcare and prescription costs double next year? How much is in your Emergency Reserve?

A financial plan is not complete without calculating an Emergency Reserve. An Emergency Reserve should be 3 months expenses in a double income household and 6 months in a single income household. An emergency reserve should be used if someone loses a job or a large unexpected expense like your car goes into the shop or a tree falls on the house. Deciding you need a tropical vacation in January is not an emergency. If you do tap your reserve, work to replenish it as soon as possible.

Establishing an Emergency Reserve is one of the first things that should be done in any plan. Once you’ve gathered the money you will need, look to place it in an accessible and safe place. Online money market accounts will generally yield more interest than checking or savings accounts. You can also transfer money back and forth to your checking account electronically making this money easy to access but not so easy to access you find yourself going to the mall with it.

If you are having difficulty finding the money to fund an emergency reserve or deciding what expenses to include, consider reaching out to a CERTFIED FINANCIAL PLANNERTM professional. This first and basic step can prevent a financial landslide and might take you to your own Super Bowl!

Happy Investing.