How deep was your coronavirus emergency fund at the start of the lockdown? A question you may pose is, “But how was I supposed to know!?” Good question. Let’s elaborate. On our site we often discuss savings funds and rainy day funds. The funny thing about emergencies is that they always happen. Regardless of what you do and how careful you are. Some things are just out of your control. There are many ways to prepare for emergencies. Some people build fallout shelters, others stack up on toilet paper. We will focus on the financial aspect of the unexpected.
What are the priority resources in times of crisis? This of course differs depending on the type of crisis. In case of a nuclear fallout having an extra $100 in your pocket will probably not be your top priority. But beyond global scale catastrophes, money is atop the list. Thus it is important to have an emergency fund ready. Here, we’re calling it a Coronavirus Emergency Fund due to current circumstances. However, you may call it anything you want. In 2008 it would’ve been the Real Estate Crash Emergency Fund. The current crisis will pass, just like all others. The one thing you can count on is that a new one will come. And no, it will not call ahead. No one even knows what it will look like. Were you ready this time? Have you learned your lesson yet? Are you ready for the next one?
Creating the Coronovirus Emergency Fund
What are your options to create such a fund? There are a few. Rule #1 is, never put all your eggs in one basket. Why? Each method of saving money has its pluses and minuses. Currently, we’re experiencing a medical emergency. This however, has brought upon us also a financial stress. Therefore, emergency cash invested in stock market funds is not the best idea. The topic is discussed here. It is a good idea to have a certain percentage of your emergency cash in a bank account. The downside here is low interest. Money invested in Real Estate is a good long term investment, but not easily accessible in times of crisis.
Leverage through Whole Life Insurance
Among the good tools to have easily accessible cash in an emergency is a whole life policy. Sure, there is a downside, which everyone will pull out as an argument. It is its high fees, which make your money grow sower than stock market funds. But now, with stocks loosing years of gains, if you tap into them for cash, this argument becomes irrelevant. By tapping into the stock market funds, you’re bound to lose large percent of your money. In a life insurance policy, taking your money out does not impact policy performance. In addition, no matter at which point of your policy you are, you always have the minimum death benefit. Insurance is a about having a piece of mind.
If you find this interesting, let’s get together and explore some options for you. Let’s start getting you ready for the next emergency today!