NFL linebacker Brandon Copeland made $990,000 in the NFL last year, according to CBS Sports — but that’s not even close to the most fascinating thing about him. He’s also built a financial empire called Copeland Media, where he serves as the CEO and oversees the company’s financial consulting firm called Cascade Advisory Group. While attending the University of Pennsylvania, he interned at UBS and has since returned to his alma mater to teach a financial literacy course. And two years ago, he added contributing editor at Kiplinger to his resume.
One piece of his advice that feels particularly relevant now — as a recession may loom and some savings accounts are paying more than they have since 2009 (see the best savings account rates you may get now here) — is this: You need an emergency fund. Here’s what he advises on that front — as well as what other experts say.
“A healthy emergency fund typically contains three to six months’ salary or living expenses, but as always, you have to assess your situation and save as much as you reasonably can,” says Copeland. (Copeland himself reportedly saves the majority of his own salary.) He notes that an emergency fund can help you in the event of a medical issue, job loss, keeping our of debt, and more.
What the pros say about an emergency fund now
Certified financial planner Danna Jacobs of Legacy Care Wealth agrees that an emergency fund of 3 to 6 months of expenses is a critical foundation for a healthy financial home. “We typically earmark these savings in high-interest savings accounts so that our clients can earn a little more on these funds,” says Jacobs. See the best savings account rates you may get now here. See the best savings account rates you may get now here.
Jacobs says if you’re a dual income household you can typically target a smaller emergency fund since you have supplemental income to support a potential job loss. But those with dependents, who have less stable jobs or who have a single income may want to save more.
“Having a substantial pile of cash to be able to draw on offers so much flexibility, and there’s real peace of mind in knowing you’ll be okay if disaster strikes,” says certified financial planner Keith Spencer of Spencer Financial Planning, who notes that it is better to err on the side of too much cash rather than not enough.
If the recommended amount of reserves seems unachievable to the household, certified financial planner Paul Collinson of Legacy Planning Advisors recommends splitting the amount into achievable parcels. “Perhaps aim to accumulate one month of reserves every 3 to 6 months until the recommended number of months is achieved. The backdrop is that it is important to hold household members accountable when setting aspirational goals such as when building an emergency fund over a period of months or years,” says Collinson.
And note that this number may be fluid. “If you’re paying for childcare right now, that would definitely be included but in a few years, it might not have to be,” says certified financial planner Cristina Guglielmetti of Future Perfect Planning.
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