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This is BiggerPockets Daily, the no

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excuses, everyday audio version of the

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world's number one real estate blog.

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I'm Tyler, and each day I

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read you short, digestible articles from

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biggerpockets.com. You can scroll through

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the catalog and see which titles catch your eye,

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or just make this a part of your daily ritual.

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We know you've heard it before. Cash

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flow is getting very hard to find.

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today. This show is sponsored

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by Airbnb. Did you know that a long

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time ago, before I ever started my real

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estate business, I turned one of my first

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primary residences into an Airbnb? And that's the

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extra income that I needed from Airbnb that

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Find out how much at airbnb.com/host. Emergency

4:15

Fund. How much do

4:17

you really need in 2024? By

4:19

Anna K. Cottrell. Setting

4:22

up an emergency fund is one of the

4:24

fundamental pillars of financial well-being. And

4:26

yes, saving can be hard, especially in 2024.

4:30

According to a recent poll by bank rate,

4:32

many of us are saving less with the

4:34

majority, 63%, saying

4:37

that recent high inflation means they're able

4:39

to save less than before. As

4:42

of 2024, only 44% of Americans could pay for an

4:44

emergency expense

4:47

of $1,000 or more from their

4:49

savings. Less than half? The

4:52

majority would rely on credit cards,

4:54

payment plans, or cutting spending elsewhere.

4:56

Ah, that's painful

4:58

to see. However, not

5:02

everyone's situation is quite as dire. About

5:04

a third of us report having

5:06

more savings this year than last year. And

5:09

millennials aren't doing so badly. Well

5:12

done, millennials. With 35%

5:14

of this generational group saying that they

5:16

have more savings than they did a

5:18

year ago. So some

5:20

of us are on the right track. But

5:22

how much is enough? Realistically, how much

5:24

do you need to have an emergency fund this

5:26

year in order to be able to weather an

5:29

unexpected life storm without relying

5:31

on the dumb credit card debt? The

5:34

other question often asked about emergency funds

5:37

is when is

5:39

it not a stupid idea to

5:41

invest yours? If you already have a

5:43

decent amount saved, doesn't it make better

5:45

financial sense to invest it?

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And get a higher return over time

5:50

than you will with a standard high

5:52

yield savings account? Which

5:54

actually they're paying pretty good right now. Anyway,

5:57

how much do you need in an emergency fund in 2024?

6:00

For. The. Traditional wisdom

6:02

you'll read, and most advice columns in

6:04

banking blogs is like three to six

6:06

months worth of living expenses. The.

6:08

Reality is that most people probably need somewhere

6:11

closer to like. Nine.

6:13

Months worth of expenses to cover an

6:15

emergency. Loan. So

6:17

much. Well, So. On Fox

6:19

President of Debt Resolution at Achieve

6:21

A Digital Personal Finance Company in

6:23

San Mateo, California Tells Bigger Pockets

6:25

that this estimate is based on

6:28

the fundamental facts of our lives

6:30

today and I quote. During.

6:32

The pandemic we saw first hand how

6:34

quickly someone can lose a job. And.

6:37

All income. Getting. Back on

6:39

one speeds even after securing a new

6:41

position. Takes time, That's.

6:45

To say nothing of medical emergencies. These

6:48

can really cause financial disaster.

6:51

As the thing with emergencies. Their. Freak

6:53

accident second plums it someone

6:56

into financial hardships literally overnight.

6:58

There's a song that says. We're.

7:01

All just one phone call from our knees.

7:04

And. If you have other obligations as

7:06

such as being a real estate investor, you'll

7:08

need to save even more. Votes. For

7:10

personal emergencies and then separately for

7:13

maintenance in emergencies at your investment

7:15

properties. Don't. Mix those two

7:17

funds. By the way, So.

7:20

Here's how to start saving for an emergency

7:22

fund. The nine months at

7:24

sea gear is daunting, even for stable

7:26

dual income households. However, the fact is

7:29

that everyone should save for an emergency

7:31

fund no matter their income level or

7:33

situation. Fox's advice is to start by

7:35

putting aside the amount that would send

7:38

you reaching for the credit card. Doctors.

7:41

Bill for five hundred bucks and appliance repair

7:43

bill for two hundred. Just

7:45

start there and in build. Fox.

7:48

Also as that doing that will benefit

7:51

you by applying and out of sight

7:53

out of mind mentality to that money

7:55

removing the temptation to spend it. Is

7:58

is worth doing. Even if you carry Chris. Card

8:00

that. The. Traditional approach is

8:02

to pay off all of your credit

8:04

card debt first before you start saving.

8:07

This. May only be realistic for some people though

8:09

if you're not saving and all. You.

8:12

Just have to tap further into debt in

8:14

case of an emergency. You. May be

8:16

better off making the minimum credit card repayments

8:18

until you build up a sizable emergency fund.

8:21

Emily Gallagher is an assistant professor

8:23

of Finance at the University of

8:26

Colorado Boulder. She told M C

8:28

N B C. Quote. right?

8:30

Now cash is king. But. Don't

8:32

know how long you'll need that extra money. That.

8:35

You're using to pay your debt. And

8:38

quotes Good point. The. Best strategy

8:40

is to drastically reduce your credit

8:42

card spending and to save that

8:45

money instead. When.

8:47

Is it a good idea to invest? Emergency

8:49

Fund. Emergency. Fund rather.

8:52

Well. Almost never. Is

8:55

actually the realistic answer? Investing

8:57

is a long term gain. We're talking

8:59

like over a decade a high yield

9:01

savings account rather than an investment account.

9:04

Is. Really, Just. it's still the way to

9:06

go for most people. In

9:09

the quote from Fox says this. The.

9:12

Idea is that the funds must be

9:14

easily accessible within one or two business

9:16

days, but not so accessible that you'll

9:18

be tempted to spend it when it

9:20

isn't an emergency. And. Quote.

9:23

And how true. There's only

9:25

one category of people who might

9:27

just get away with investing their

9:29

cash reserves instead of saving them,

9:31

people whose monthly expenses are significantly

9:33

lower than their earnings. And even

9:35

then, financial planner Rj You Weiss

9:37

it tells Business Insider. That. The

9:40

best strategy is to invest in a

9:42

taxable investment account. Like a brokerage account,

9:44

you'll have to pay taxes on your

9:46

money if you do withdrawal. But.

9:49

At least the funds will be easily

9:51

accessible. Should. You need them. All

9:56

righty, Thanks. for making the show a

9:58

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And I'll see you back

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here tomorrow.