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Energize the Emergency Fund

4 min read
Energize the Emergency Fund

Energize the Emergency Fund

Energizing the Emergency Fund

We already know that we need to have emergency fund savings in place.  The next lesson or step is learning how to energize the emergency fund for the best possible end result regardless of if and when we need to access those funds. 

Emergency fund savings is not a debate it’s a must-have, but many times people lose out on their cash value because they don’t look at their money in the correct way. They neglect to put a future value on their money. Remember if your money is earning little to no interest or rate of return then the future value of that money it’s not going to look much different than it does today with one big caveat which is the hidden tax of inflation which will continue to eat away at the purchasing power going forward. 

So, how does this apply to our emergency fund?  Well, if you’re putting your emergency fund in something that’s earning little to no interest or rate of return (essentially let’s call it mattress money) you might be surprised if you took another approach at just how much money you could be earning over your lifetime just on those emergency fund savings! 

Now the purpose of the emergency fund is clear; we need safety, and we need accessibility.  You want to have easily accessible money to use when you need it at any time that you do need it.  If you happen to use that money for an emergency, you want the ability to work on building it back up again so that in the future it’s there if you need to use it again.  What that usually does is it creates like a three-cycle scenario. 

Number one we have to establish, and we have to build our emergency fund.  Number two as an emergency comes up, we’re going to take money out of that fund to use it for the emergency and then if that takes place then we have to replenish the emergency fund with the money that was used for the previous emergency.

So, what’s the problem with this cycle?  Well it’s not the cycle itself, the problem most people will have is this…they’re going to put their money into a simple bank account like a typical savings account and they’re going to immediately lose on their right to earn the growth they could have possibly earned now as well as going forward and if you add that up over an entire life cycle we’re not just talking about chump change here. 

This is a huge loss in opportunity cost!  People get the impression that in order to have the safety of their money they have to give up and sacrifice in exchange for little to no growth, that just isn’t the case.  Being your own bank and utilizing the privatized banking concepts you can learn how to borrow and pay that money back as often or as little as you want however and just by letting that money compound at a decent rate of return you end up participating in the growth of your emergency fund savings instead of like we noted earlier sacrificing that and giving it to the bank, putting them in the position to earn that rate of return not to mention the other benefits like tax free access buying a death benefit and the safety of principal and previous gains.

So, when it comes to your emergency savings fund you want it somewhere safe and accessible like we talked.  If you’re going to put it somewhere safe and accessible you do have choices: bank accounts, money markets, short term certificates of deposit, some bonds, or permanent cash value life insurance.  When it comes to emergency fund savings cash value life insurance is going to be tough to beat.  You always have choices with your money continuing to educate yourself to make better choices makes a difference both now and going forward

We are not saying you take risk with the emergency savings, the entire point is to avoid risk on this money so if you’re unclear about being your own bank or some of the concepts and strategies of privatized banking as well as the benefits and the advantages that system has, don’t make any immediate moves now just continue to be disciplined in the education process and learn all you possibly can.   Time invested into getting better in personal finance is one of the best investments you can possibly make in your lifetime.

Millionaire Mindset Life

Submitted By Mike Amos

Founder and Active Contributor of millionairemindset.life

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