A Wake-up Call for All of Us

Recent events, like the government shutdown, have shined a spotlight on how financial disruptions can hit anyone, often without warning. Overnight, countless individuals faced the hard reality of managing life without a paycheck. The truth is, many people are just a paycheck or two away from facing real financial hardship.

At On Purpose Financial, we know that living paycheck to paycheck is all too common. It’s a situation driven by rising costs, unexpected events, and life’s unpredictability. The good news is by implementing an emergency fund, clients can put themselves in a better financial situation so that a sudden change doesn’t create an immediate financial emergency.

Why Everyone Needs a Safety Net

We’re all at risk of income disruption, whether from job loss, illness, government shutdowns, big home or car repairs, or medical expenses. Sometimes, all it takes is a small financial shock to send even the most careful planners off course. Without a cushion, covering the basics like rent or mortgage, utilities, and groceries can suddenly become overwhelming, potentially leading to challenges that last far beyond the initial setback.

How Much is Enough?

A good rule-of-thumb is to have between three and six months’ worth of living expenses in reserve cash. But your ideal number depends on your household situation and your personal comfort with risk:

• Single income or less stable work: Lean toward six months, or more, for greater security.
• Multiple incomes or stable employment: You may feel confident with less, but having at least three months’ expenses covered is wise.
• Risk tolerance: If uncertainty keeps you up at night, a larger emergency fund can provide re-assurance and flexibility.

Special Considerations for Retirees

If you’re living in retirement, having cash in reserve is also critical. Market fluctuations can be stressful, especially if you have to sell investments at a loss just to pay regular bills. By keeping a healthy cash buffer, you can avoid selling assets when the market is down, helping preserve your investments for when you really need them, and making your income in retirement more sustainable and less stressful.

Where Should You Keep Your Safety Net?

The best place for your emergency fund is somewhere safe, accessible, and separate from your day-to-day spending account. Options might include:

• A high-yield savings account where you can access cash quickly if needed, and you might even earn a bit of interest while your money waits.
• A money market fund within your investment account can offer both liquidity and a modest rate of return.

Remember, the primary purpose of these funds is not to generate a big return, but to be ready and available exactly when you need them.

Our Perspective: Confidence Over Crisis

At On Purpose Financial, our mission is to help make sure you have the money you need, when you need it, so you can focus on your priorities and not worry about what’s around the corner. Building an emergency fund isn’t about fearing the unexpected; it’s about having confidence and control, no matter what life throws your way.

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Material Prepared by Tic Tac Toe Marketing, an independent third party. Any opinions are those of the author, are subject to change without notice and are not necessarily those of Raymond James. This material is being provided for information purposes only and does not purport to be a complete description of the securities, markets, or developments referred to in this material and does not constitute a recommendation. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Investing involves risk and investors may incur a profit or a loss regardless of strategy selected. Neither Raymond James Financial Services nor any Raymond James Financial Advisor renders advice on tax or legal issues, these matters should be discussed with the appropriate professional.