Create Your Own 'Bad Luck Fund' For Life's Inevitable Setbacks
This personal finance article argues that traditional emergency funds are inadequate because bad luck expenses cluster unpredictably. It proposes a 'bad luck fund' structured as a two-bucket system: 20% in liquid cash for immediate shocks and 80% in conservative income-generating assets (like SHV, TIPS, and VCIT) yielding ~4%. The goal is to generate $10,000 annually to refill the cash bucket without selling principal during market downturns. The article calculates that $250,000 is needed to produce this income. It cites Bureau of Labor Statistics data showing average household spending of $78,535 in 2024 and notes that unpredictable expenses typically range from $6,000 to $12,000 per year. The piece includes a sponsored segment promoting SmartAsset's free tool to match readers with financial advisors.
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