The emergency fund is one of the basics of long-term financial planning, but as an accountant when I touch base with my clients and ask them about the status of their financial wellbeing, I find that the verdict is split, some don’t really have one.  Granted this is the case more for younger clients than older ones.

I then ask them about where they stand on the issue of a HELOC.  My younger clients do tend to own their home, whether it is a condo, townhouse of house.  In my mind the HELOC can be the emergency reserve if needed for a new furnace, hot-water heater, AC or plumbing issue.  The HELOC probably does not have the capacity to cover both people being unemployed.

But I do encourage them to start a reserve even if it is $50 or so a month.  It helps to get something in place.

Do you have an emergency reserve?  If so, how long will it last you?

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