Hope for the Best, Plan for the Worst

Freeman celebrates while Cortes walks to the bench

It was not a good opening for my Yankees this past weekend. It is not easy to kick off a series in your opponent's territory, but it looked good until that dreaded Freeman v. Cortes moment after a great catch by Verdugo to take Ohtani out. Am I upset over all of this, absolutely not. Sports and sports teams are fun, but a win or loss does not bother me. Especially, growing up watching the Jets continuously lose, the Knicks lose to the Bulls, and the Yankees with Don Mattingly and the dreaded baseball strike. A loss became expected, but that did not stop me from hoping for the best.

All this did was remind us of the challenge we have in America and probably across the majority of the world. We spend a lot of time hoping for the best but little time preparing for the worst. I've written and instructed people about life insurance, wills, and emergency funds before, but where are we as a country? There are varying studies, from 25% to 44% of people in America who have less than $1,000 in savings to cover an emergency.

Here is a great picture from Forbes laying out the current state of savings in America.

Savings across America by Generation

https://www.forbes.com/advisor/banking/savings/average-american-savings/

All the article and the picture tells me is that people are not prepared for the worst. Having an emergency fund is a necessary cushion to provide the support you need should something happen. The problem I hear over and over again is that people shift their focus to their credit cards when unforeseen circumstances come up. Unfortunately, what that means is that you are going to be paying from 20-30% interest to cover your emergency, which is then going to take you longer to recover from, which then leads to another emergency before the prior emergency gets paid back and deeper levels of debt.

This is not a doom and gloom post, but rather a wake-up call, if you are sitting there with less than $1,000 in your savings account, then get after it and start saving. Now if you read further down in the article, you will see that less than 20% of people have between $10,000 and $25,000 in savings, unfortunately what you don't see is why they have even that much in savings, but I guess that it is not for emergencies. It is probably more for vacations, cars, or housing deposits. While there are a few that probably have it for emergencies, I guess that it is not many.

Why is this number important? Because, the ideal emergency fund should be about 3-6 months of expenses, which for most should be about $10,000 to 25,000. To determine your emergency fund goal, take your budget, cut out any excess (restaurants, general spending, etc.), multiply it by 3 to 6, and set your emergency fund goal. It is a lot easier to figure out than it seems, but it is important that you have an idea of your overall budget first. Then you are ready to set a goal for 2025 to have that amount in cash, in a local high-yield savings account should you need it.

Now, once you are done saving you have a cushion should something unexpected come up such as home repair, car accident, job loss or you name it. That is what the emergency fund is there to cover. Do not get out of control, it is not for that unplanned vacation, excess grocery spending, or anything like that. Define what is an emergency and set your boundaries up so this does not just get eaten up month over month to cover a lack of budget discipline.

Now as we move back to NY tonight, I'll continue to be hoping for the best for my Yankees, but I won't be crying should they lose this one to a very well-rounded tough opponent. Instead, I'll be happy for the Dodgers and look towards a 2025 run at the championship.