The Most Practical Money Tip You’ll Hear Today
00:00:00.000 | So the first step in how I allocate money is what I'll call operating cash,
00:00:03.780 | which involves making sure you have one to two months of your regular expenses
00:00:07.620 | sitting in cash right in your checking account.
00:00:10.160 | But this is not an emergency fund.
00:00:12.100 | This is not a giant amount of money to solve all these problems.
00:00:15.220 | It's your cash flow buffer for each month to smooth over the gap
00:00:18.960 | between the fact that sometimes you have bills that are due before your income hits
00:00:23.440 | and you want to make sure you're not having to go borrow money,
00:00:25.900 | transfer money when that happens.
00:00:27.360 | It also means because it's one to two months that there is a small buffer for some urgent thing
00:00:32.700 | like a high health insurance deductible, a sudden car repair.
00:00:36.360 | You want to be able to cover those things without having to dip into your savings.
00:00:39.840 | So this is your pay your bills.
00:00:41.400 | Don't get caught off guard fund.
00:00:43.020 | It's simple.
00:00:43.860 | It's boring, but it's probably the most practical and essential piece of your framework
00:00:48.820 | for how you allocate your money.