• Mark Olivito

The Value of An Emergency Fund is NOT Just For Emergencies

Emergency funds, that infamous 3-6 months of living expenses that are supposed to cover you in the event of a job loss, or some other unexpected event. Financial planners long have advocated them as smart financial planning. They are right, but they are DEAD WRONG on 3-6 months. That may have worked before the 2000’s, no longer.

Strive for 12 months…..the economy is changing too rapidly to be covered for less….


I would argue the following for people that have less than 3 months of living expenses (the majority of folks):

  • They are ultra-tentative. They play it safe and lay low.

  • They “tense up” in confrontational situations. They may avoid conflict all together. Impossible to perform in business, sports or any profession when you’re tight vs. loose.

  • No bold risk taking. Striking out often comes with swinging for the fences. Failure is avoided at all costs when your paycheck to paycheck.

  • They live by OTHER principles, not their own. When you operate under someone else’s rules vs. your own, will you be more happy or less?

  • They have an overwhelming tendency to stay “under the radar.”

IF you agree that the above points characterize those without a cash cushion, than wouldn’t the opposite be present for those WITH one?

So let’s think about this: Having a strong cash cushion, close to 12 months of living expenses means you are MORE likely to…..

  • NOT be content with flying under the radar, they want to be “in the mix.” High profile, big projects that matter, even with small likely-hood for success

  • Embrace conflict, even if it’s messy

  • Have a clear vision of how you want to contribute, related to the business goals.

  • Are OK taking risks and playing loose.

Is it fair to paint this “opposite” portrayal simply due to one’s checking account/liquidity? Of course not! It is one element of many that starts to tilt the deck in your favor….

Doesn’t it make sense that FEAR is a detractor in your pursuit of EXCELLENCE when it comes to performance? Financial IN-security fuels fear. Build your emergency fund and start playing loose.



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