Interview: Jean Chatzky
Other ways to prepare for crises
Besides having an emergency fund, what are some ways that people can financially prepare for common crises, such as job loss or a large medical expense?
|Make financial goals tangible|
I think part of the planning is making sure that you're properly insured. That means going through the list of coverages -- do you have the right type and amount of health insurance? Life insurance? Most of the people reading this will not have disability insurance and many of them should. It's expensive but if you can buy it through your employer, it's often something that you can afford.
Do you have a will? 70 percent of people don't have wills, which means that a lot of parents of young children don't have wills and haven't named guardians for their minor children. You need a will when you have dependents, or if you have an object that you care about where it goes to.
In your book, "You Don't Have to Be Rich," you talk about feng shuing your finances. Would you explain what that means as it relates to emergency funds?
In terms of finances in general, I don't know if it does relate directly to emergency funds, but what I do know is that people who have an organizational system for their finances are much happier. When they need to put their fingers on an important piece of paper, they can do it very quickly and without a big headache. So it saves them time and money. This is not telling people they have to go out and hire a professional organizer. It's not telling them that they have to drop a hundred dollars or two on organizing tools. All I'm saying is that you need a filing system that you understand, so that if you're across the country, and you need to call home and say to your spouse, "I need you to find the last three statements from our brokerage account," here's where you can pinpoint exactly where they are, and somebody else can find them for you.