Building a Safety Net: How Much Does Your Life Cost?

Here's how to set your emergency money goal and then save for it.



“If I waited to be invited in, I never would have stood out. If I waited for change to happen, I never would have made a difference.” — Serena Williams, in a Super Bowl commercial for dating site Bumble.

GROW STRONG How to build up a financial safety net.

Even if you didn’t go without a paycheck during the recent government shutdown (which may happen again as early as next week), it shows just how easily things out of our control can affect our financial security. Big ones, like a job loss or illness, and smaller ones, like a broken appliance or car repairs.

The shutdown serves as a reminder of just how important it is to make certain moves to protect our money.

You’ve probably heard the solution that you should set aside, if possible, three to six months’ worth of living expenses in a “rainy-day” account. Sure! Right after you conquer Westeros or win the Powerball. Whichever comes first.

More realistically, even an initial aim of a few hundred dollars is a strong start. Four in 10 of us can’t handle a $400 emergency expense without selling something or borrowing, according to a 2018 report from the Federal Reserve.

Here’s how to get started setting aside for unexpected expenses:

  • What should my savings goal be? That’s up to you and your comfort level, says Doug Boneparth, a certified financial planner and author of “The Millennial Money Fix.” If you feel less secure in your job or aren’t in good health, those would be reasons to consider a bigger savings goal. If you have more than one source of income (you and a spouse both work or you have multiple jobs, for example), maybe you feel comfortable with a smaller goal.
  • What should I count as a “living expense”? Think about it this way: How much does your life cost? Add up the bills you need to pay every month, including ones that are fixed (rent/mortgage, insurance premiums) and those that vary (groceries, electric bill). Look back over recent months to see what your totals are. Don’t count in expenses you would cut out or cut back on if money is tight.
  • How do I get started? Don’t let the size of the goal scare you. Even a little bit of savings can help provide a buffer in a smaller emergency, so that you have options other than taking on debt. Aim to set aside small contributions whenever you can, and save a portion of windfalls like a tax refund or raise.
  • Where should I put it? This money is your safety net. It should be somewhere safe, where it’s not at risk of losing value and you can get to it quickly and easily, Boneparth says. Your savings or checking account are good options.

WHAT’S GROWING ON SAVE: One trick to drive a hard bargain at the auto dealership

If you’re in the market for a car, new or used, your purchase just got a whole lot more expensive. Auto loan prices are at their second-highest level in a decade, according to an analysis from

On a new car, the average rate in January was 6.19 percent, up from 4.99 percent in January 2018. On a used car, the average rate was 8.88 percent, up from 7.83 percent from a year ago. That could cost you thousands of dollars more over the life of your loan.

But you don’t have to buckle up and accept that. The solution is to shop around.

Before you head to the dealership, see what kind of financing you can get from local banks and credit unions, says Michael Harley, executive editor for Kelley Blue Book. Apply online, and you can knock out this task in under an hour. When you’re comparing, don’t just focus on rate.

Consider the length of the loan, too. The more months it takes to repay, the more you’ll pay in interest overall. At the dealership, don’t show your hand right away. Wait until you’ve already negotiated on the price of the car to tell them you shopped around on financing.

“They’ll try to beat [your best offer], and in many cases they will,” says Harley. Even if you don’t want to use the bank financing, “it’s a very good negotiating tool.”

SPEND: Even with Super Bowl bets, there’s no “I” in “team”

Sorry to interrupt your touchdown victory dance. But before you start making big plans for money won over Super Bowl weekend in a casino bet, pool or fantasy league, know this: The IRS expects to share in your good fortune.

Large or small, those wins are considered taxable income. No wonder. There’s a lot of cash trading hands.

Betting on the Super Bowl is a $6 billion play, with 1 in 10 Americans getting in on the action, according to an American Gaming Association survey . Keep an eye on the mail for tax-time paperwork related to big-ticket gaming wins last year.

As CNBC points out , a casino would send you a form called a W2-G, and your fantasy sports league host should send a 1099. (The IRS gets copies of both of those forms.)

INVEST: Studying up on college savings tax breaks

“Tax” is a three-letter word that you’re going to be hearing a lot from me, clearly. Some breaks are more valuable than others.

Case in point: When you’re picking a 529 college savings plan to invest in for your kid’s education, chasing a state income-tax benefit may not be your best bet. More than 30 states and the District of Columbia offer residents tax savings for putting money in a college savings plan.

But as this map shows, it’s often not worth much. (Plus, their example assumes you have a six-figure income and can afford to invest $200 a month. You’ll see even less of a tax break if you don’t earn or save as much.)

So what should you look for? Fees and investment performance, which have a bigger impact on how your balance grows. Morningstar has rankings that take out a lot of the guesswork.

You can invest in any state’s plan — you don’t need to live there, and your kid doesn’t need to attend school there. (Just know that if you invest in a plan that doesn’t belong to your home state, you may lose that tax break, small as it is.)

INSPIRE: A heart-warming tale from the arctic blast

When temperatures in Chicago dropped to about 25 below zero last week, several good Samaritans stepped up. Real estate broker Candice Payne paid for hotel rooms to bring people in a nearby homeless camp — who were without a source of heat — in from the cold.

As her efforts gained attention, other people and businesses began pitching in, too, offering cash for more rooms and donating food, clothing and other items. The campaign has kept more than 100 homeless people out of the brutal winter weather.

“I am a regular person,” Payne tells The New York Times . “It all sounded like a rich person did this, but I’m just a little black girl from the South Side. I thought it was unattainable, but after seeing this and seeing people from all around the world, that just tells me that it’s not that unattainable. We can all do this together.”


A moment of mindfulness.

“One kind word can warm three winter months.” — Japanese proverb.