After hearing about LearnVest via NPR's How I Built This podcast, I wanted to see what it's all about. Basically, they provide cheaper/more accessible financial planning services, which seemed interesting. On their site they provide this sample plan:
https://www.learnvest.com/wp-content/uploads/2016/12/LearnVest-Financial-Plan-Sample-Only.pdf.
One thing that jumped out at me is their emergency fund recommendation: they suggest the sample customer save 6 months of his
take home pay instead of ~6 months of
expenses, which I see recommended more often. This puts his target emergency fund at ~$29k, which seems an excessive amount of readily available cash, given his "fixed expenses" for 6 months are less than $17k. If you add in 6 months of what they term "flex spending" (for some reason they include groceries in this category, which seems more like a fixed/necessary expense, but nvm that), it comes to ~$25k.
To me, take home pay is a poor/irrelevant metric to base an emergency fund on. 6 months (12 maybe, on the high end) of however much cash you need to survive and meet payments/obligations seems more sensible. Especially in a dual-income HH. (I also know some of you rely on a HELOC as an emergency fund. Not a home owner, so haven't looked into the finer points of this.)
Do we chalk this strange recommendation up to the typical shortcomings of conventional financial advice, or am I missing something?
