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StitcherNow that you’ve built the foundation of your financial plan, it’s time to prepare for the unexpected. In part two of this four-part series, Jen and Jill shift the focus to two of the biggest pillars of financial security: paying off debt and building an emergency fund. Together, they break down how to create a plan that helps you tackle today’s financial challenges while protecting your future.
It’s not just about what you do with the money but how you receive money
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To help you get started, we created a free Google Sheet that walks you through building your own financial plan with everything we’re covering in this series. You can grab it at frugalfriendspodcast.com/plan
And if, at any point, you decide you’d rather have a professional guide you through the process head to frugalfriendspodcast.com/cfp We’ll help connect you with a financial planner who’s the right fit.
Be sure to subscribe to Frugal Friends on YouTube so you don’t miss the rest of this four-part series or any future episodes!
The Elephant in the Room: Debts
When talking about debt, it isn’t just numbers that we are concerned about. It also affects your emotions and mindset. For that reason, Jen and Jill recommend evaluating debt payoff decisions through three lenses: financial, psychological, and emotional. With these considerations in mind, they suggest mapping out a practical debt payoff plan over the next one to two years and incorporating it into your overall financial strategy.
Planning Emergency Fund
With a debt payoff plan in place, the next step is preparing for life’s unexpected expenses by building an emergency fund. Jen and Jill recommend starting with a starter fund of $1,000 or enough to cover your health insurance deductible, then focusing on paying off high-interest debt before growing your savings to three to six months of living expenses.
Beyond cash savings, true emergency planning also means having the right insurance in place. Health, auto, life, and disability insurance all serve as important financial safety nets, protecting not only your savings but also your income and long-term financial goals when the unexpected happens.
When to Seek Professional Help?
Consider working with a Certified Financial Planner if you’re thinking about refinancing, restructuring, or consolidating debt, have both a high income and significant debt, receive a large windfall or inheritance, or are navigating a major life transition like a divorce or the loss of a loved one. They also recommend seeking advice before purchasing complex insurance products to make sure you’re making the best decision for your financial future.
What’s Next?
In part 3, we’ll talk about something that’s bound to happen and something we will have to prepare for: retirement.
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