OMG we are out of DOGGY TREATS! EMERGENCY!

Ok listen up humans!! Today is all about emergency funds! Let me ask you a simple question…

What would you do if something bad happened to your human?

How would you survive?!!? Let’s say he was gone for days! Or worse—MONTHS! You may have to beg for food (how degrading for a cute cuddly puppy!) Or worse, you might starve! WOOF WOOF! NOOOO NOOOO!

However, If you had a properly funded emergency fund (of doggy treats) then you would fare just fine. This is why I always keep a stash of doggy treats in my bed (under my squeaky toy… shhhh… don’t tell MY human!)

But I strongly warn you, if you are one of those unfortunate humans living paycheck to paycheck, then you are in serious trouble. You need to get an emergency fund started RIGHT AWAY.

Take a look at this cool questionnaire I have made for emergency funds. This will tell you how much you need, and for how many months. It is based on income, job stability, and family.

1. Everyone = Needs an emergency fund of at least 2 month
2. Kids = Add one month for each kid you have
3. Significant other has job = Do not add anything
4. Significant other does not have job = Add 2 months
5. If you make less than $30,000 a year = Add one month
6. If you make between $30,000 - $60,000 a year = Add two months
7. If you make between $60,000 - $120,000 a year = Add three months
8. If you greater than $120,000 a year = Add 4 months
9. If you feel stable in your job = Add nothing
10. If you do not feel stable in your job = Add 2 months

There you have it, its that easy! (The hard part will be saving up this amount)
The max amount you can add up to from this analysis is probably about 12 months. The lowest you can end up with is 3 months.

Now, you might be questioning my logic. "But Alex, isn’t more money for an emergency fund better?" The answer is no. No its not. Because your emergency fund should be stored in a savings account. Savings accounts have incredibly low interest rates. You want your money to work for you. You need to invest the money that you haven’t put in a savings account. I will discuss this in a future blog post.

“But Alex, I understand why you have differences for emergency funds for those with dependents, but why do you vary it based on income?” This is simple. Its because based off income you have better employment prospects. It is very likely that an investment banker will have a harder time finding a job that pays $120,000+, than someone who works at McDonalds and makes $6/hour. Trust me, it is EASY to get some of these low paying jobs (i.e. pizza delivery). Also, it will take these low earners a lot longer to create their emergency fund. And I don't want them spending their whole life trying to do it. They need to invest, and if they listen to my advice they will be fine.