Having discussed why having an emergency fund is a good idea and how big an emergency fund needs to be, I’d now like to talk about investments suitable for an emergency fund. Read the full article

In my first post on emergency funds, I discussed why having an emergency fund is a wise idea. The next question is, how big does an emergency fund need to be? Read the full article

Most financial planners advise their clients to have money set aside in an emergency fund. Occasionally my clients ask me why they need to keep money on hand for emergencies.

If you’re like most Americans, once you’ve paid your credit card bills, mortgage, and your other bills, there’s not much left of your paycheck. If you’re someone who lives far below his or her means (by this, I mean that you have two or three thousand dollars a month or more left unspent from your income every month) you have the capacity to cover many typical unexpected expenses, like the sudden failure of your heating system in the middle of winter. If that's your situation, you’re in a position to cover emergency expenses from your cash flow – unless the emergency happened to be the loss of your job, in which case you’d still be in trouble.

The fact is, though, that few households have large amounts of cash flow that go unused from month to month. Read the full article

In Part 1 of this series, I explained why people need life insurance; in Part 2, I explained the basics of “how insurance works.” A question that people always have is, “how much life insurance should I buy?” There are various guidelines for estimating how much life insurance one should buy. Alas, they usually lead to the wrong answer. Read the full article

Today I’d like to offer a simple explanation for how life insurance “works.” This discussion will also lay a foundation for discussing the difference between term and permanent life insurance. The first post in this series, on the reasons someone might need life insurance, is worth reading if you're not sure whether you need life insurance. Read the full article

Everyone has heard of life insurance and most people have some; it’s not an exotic concept. Yet for the average person, buying life insurance means signing the most complex contract you'll ever enter into. This will be the first of a series of short primers on life insurance: why people need it, how it works, how much to buy, what kind to buy. Read the full article

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