Is it Time to Rethink Your Emergency Fund?

At what point is an emergency fund no longer necessary for your financial situation? 

Never, right?

 

Because common sense tells us that everyone needs an emergency saving fund.

 

Indeed, you've likely heard how crucial it is to have money set aside as your first step in building a solid financial plan.

 

But the fact is that for some, an emergency fund in the traditional sense tends to make less sense as a household earns more money and accumulates more assets.

 

Now, make no mistake, for many families, a well-funded savings account can make the difference between staying solvent and falling into a tight financial predicament.

 

But with that said, a time likely will come for high-earning individuals and families when having any more than a few months' worth of living expenses in your bank savings account just doesn't make sense anymore.

 

To be sure, when it comes down to it, a dedicated emergency fund may have served its purpose early on in your career. But now, as your station in life has become more favorable, you'll likely need to take a more tailored approach to mitigating financial risks.

 

Ultimately, as your income and net worth rise, following generic financial advice will likely lead to suboptimal outcomes for your cash savings.

 

That's why having a cash management plan in place and transferring financial risks to suit your unique financial situation is crucial to making the most of your money.

 

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