--- title: 'The Biggest Lie in Finance: The Emergency Fund' source: 'https://youtube.com/watch?v=QX-pl4cBxCs' video_id: 'QX-pl4cBxCs' date: 2026-07-24 duration_sec: 680 channel: 'Gabriel Ferreira' --- # The Biggest Lie in Finance: The Emergency Fund > Source: [The Biggest Lie in Finance: The Emergency Fund](https://youtube.com/watch?v=QX-pl4cBxCs) ## Summary The video argues that the biggest lie in personal finance is the concept of an emergency fund, which many people neglect, leading to financial ruin when unexpected expenses arise. The host, Gabriel, explains how to build and maintain an emergency fund to avoid debt and bankruptcy. ### Key Points - **Financial Disaster Scenario** [00:02] — Most people are unprepared for financial emergencies and could go bankrupt if they don't have an emergency fund. - **Example of André** [01:11] — André faces a car breakdown, takes a loan, loses his job, and enters a debt spiral because he lacked an emergency fund. - **Peace of Mind** [02:10] — Having an emergency fund provides peace of mind, knowing you can handle emergencies without debt. - **Impact on Investments** [02:23] — Without an emergency fund, you may have to liquidate investments early, disrupting compounding growth. - **Emergency Fund Definition** [03:18] — An emergency fund is for emergencies only, not to make you rich, but to prevent sudden poverty. - **What Constitutes an Emergency** [03:44] — Emergencies affect basic life: health, food, rent, or essential transportation. Investment opportunities are not emergencies. - **Personalizing Emergency Fund** [04:37] — Define your own emergencies and their costs. For example, if you need a car for work, a car breakdown is an emergency. - **Calculating Fund Size** [05:04] — A common rule is 3-6 months of living expenses. For €1500/month, that's €4500-€9000. Adjust based on personal risk. - **Saving Strategies** [07:30] — Cut expenses, increase income with side jobs, or save consistently. Even small amounts like €500 help. - **Where to Keep Emergency Fund** [08:52] — Keep it safe and accessible, separate from daily accounts. Consider low-risk investments like Trading 212 with 2.2% annual yield and daily interest. - **Using and Replenishing Fund** [10:12] — When you use the fund, prioritize replenishing it before other financial goals to stay protected. ### Conclusion Building an emergency fund is crucial to avoid financial ruin. Define your emergencies, save consistently, and keep the fund accessible yet earning some interest. ## Transcript a period of financial disaster. And I am certain that I will explain the I am about to say. And a lot of people will think, well, it's not necessary or that it won't happen to her. And the truth is that most people will go through prepared for it, they could literally go bankrupt. And I'm not kidding. And in these next few minutes how to avoid hitting rock bottom. Hey, please don't to me. The start of the year in Portugal was a complete disaster, wasn't it? The Coimbra, and throughout the country, actually. And nobody thought something like this would last year's blackout, nobody thought that was going to happen either. So, happen. So, get comfortable because you're about to learn what an you need more of one than you probably imagine. In addition to this, for your emergency fund, strategies to build it up grow so it doesn't sit idle. So, hello, my name is Gabriel ways to make money online, while I discuss my entire journey from zero to a million dollars, and even being recognized by Forbes as one of the 30 teach here on this channel. I would also like to point out that I am not a opinion. And by the way, a big thank you to Trading 212 for supporting this video, but we'll talk more about them later. So let's start with the mistake. name is André, he works, pays his bills, has a normal life, gets to the groceries bought, leisure time enjoyed, and boom, his car won't start and the to the account, there's no money for that, but he needs the car to get to work he wants to go, for example. So he solves the problem quickly with a but it's what he needs. I need the €1000, I'll take out the loan, and the following month there will be a loan and I'll be unemployed. Therefore, not only was his credit already being money. We can't wait for subsidies, because he has to find first job opportunity that comes along, not because he likes it, but because he needs to, and the loop continues, the negative things keep going, going, very specific scenario. It could have been avoided with an emergency fund. It was. So, for me, this idea of ​​having the peace of mind to live knowing that if money for it and to resolve that emergency, that alone is worth more than the an emergency fund can even delay your investor or someone who is already investing for retirement and you might delay it for several something happens and you have to get money from somewhere and you don't have investments that were starting their compounding cycle, because things continue to go well, will keep but if I cut off the beginning, which is what takes the longest to get going, I'll drag it out for who although with different names, different emergencies, and a completely different whole thing, right? This was people face when they have no emergency fund, but many don't even video, but I also say, in order to learn something, we have to start from the with huge things right away, because then it seems like too much and we give up on the process. As the name suggests, an emergency fund is emergencies. Although I'll teach you how you can also make money from it, intended to make you rich, OK? The goal, man, is to prevent you from suddenly becoming poor so, I'll still show you how you can at least make a minimum profit trading partnership. Here's a spoiler: they have a type of investment where you can receive daily interest on capital that isn't invested. enter the quotation marks, and activate that function there. But in the second-to-last chapter of this video, the easiest way you can think about it is to think of it as monthly fee to any insurance company; you are your own insurance company. Now, what people not knowing how to distinguish between something that would be useful and an emergency, because not something that affects your basic life or the lives of those for whom you are responsible. children or if you are someone's guardian. Oh, and of course, there were things that related to health, basic food, paying rent, things that I can already say are not emergencies, investment opportunities. Although I hope you enjoy all of these things . I think you're doing very well, and I also want to take advantage of it, and I am. Don't with other money. Now that finances are personal, we may have different definitions for emergencies. If my car breaks down, but I have isn't an emergency, because I still have a way to get there. On the other without a car, it becomes an emergency, because I don't bring money home if I'm not going to work. And that's why I consider the next point one never see even people who already have an emergency fund doing. And this is emergency. You are the one who recognizes your life, you are the one who knows your money. constitutes an emergency for you, and how much they cost. In America, it's living expenses. In this case, imagine, I'm thinking about the lot of money. Let's assume you spend €1500 per month on groceries, things you really need. If you multiply that by 12, you have an emergency fund worth €18,000. Imagine, we're in tell us to do. And then we also have a range of support measures for people, all their money at once, who become unemployed, and so on. So, I think we should lives, and not fall into these theoretical exaggerations. I'll tell you what I don't have to do the same as me. This is just what I find works want to do this little extra work that I do, the quickest way and the easiest trick is to see how much you spend on average per month on necessities and a comfortable number for you to start saving, and see if it night, that at least covers your expenses, or if, on the this question. What constitutes an emergency for me, and how much does it emergency is the car." What is this thing about the car? Well, whether it was a serious, how much would you be willing to pay for a solution? example, €5,000 to fix it, wouldn't you show up? Perhaps you could buy a necessary? These are just ideas, because let's suppose you drive emergency, you're not going to replace it with an identical one. Forget about it. If you don't have one thing to do, it's to use your regular money, but in an emergency, you might buy that and won't give you too many problems. And you do the work of naming and costing your emergencies, and then you do the math and think, " Sure, they're not all going to happen at once, but more or less within this range, once, what would be this comfortable amount that would allow me to sleep well at these emergencies, could I really afford it?" Now, of course, you have to pay attention if you live at home with your parents, or if you have children, or if you have access to permanent contract; all of this should weigh on the decision regarding that number, because, for example, if agency, the emergency that could happen to me is being without a car for thinking about the supermarket, or food, or rent. Depending on reality. But once again, we are all different. It's very funny that Paulinha, my fiancée, is very proper at home and likes to for example, [clearing throat] just having what I was explaining if I say, "Look, you have three months just for minor emergencies." She wouldn't be example, it makes sense for her life to have more. So, what is it that makes you all your money, you have six months' worth of expenses—not just for emergencies, but for your this money set aside because she can afford it, she has these capabilities; obviously, she's a her emergency fund has nothing to do with mine, because I don't calculate it makes sense to you. Sorry, I've emphasized this point several times, but OK, Gabriel, very cool and all. That idea sounds great in theory, but know, saving money isn't easy for everyone. Not everyone has the same aware of this, but we will still have to treat this as a of us from a major problem. But the good news is that there are several to achieve your goal, in this case, an emergency fund. money or if you can save consistently, you just need to save it in a next chapter. Secondly, you can look at your expenses and cut and adjust or increase your savings rate. For example, subscriptions you renegotiate in a more extreme way. You can always temporarily make is, work extra hours, accept a second short- occasional jobs that sometimes exist, such as promotional work, which is a Basically, I'm just giving you ideas to think a little outside the box so and save if you don't have that ability on your own. OK? emergency fund, imagine you manage to get the first €500, the first €600, the see now. The safe, this money will have very emergencies, it's best if it's safe and accessible; you don't want to have an waiting several days for the money to arrive in your account before you can use it. separate account from your day-to-day expenses, otherwise you might suddenly get the urge be in a safe place. And although this isn't mandatory, I prefer to not to be impacted too much by inflation. In other words, everything invested in a place with a high risk of losing it, because if it's for emergencies, I don't want to take that much of a risk . Therefore, I'm going to low risk. And where do I keep my money? Trading Tun is a investment method that I really like, which has a lower risk and manages to yield 2.2% annually, with payments made daily. This isn't entirely n't have to be much, OK? The goal is not to make money. And regarding emergency, it will be easy to withdraw the money there. Yes, you have two options: either you faster, you can request their card and spend directly from it never had to use my emergency fund until today, but I know that at least if I ever need it, it's there and it's earning some interest. So it is offering a fractional share up to a value of €100. To everyone description, skip the R code or enter the code Gabriel. With this promotion, Trading TU has euros in fractional shares to my account. And if you really want to be one of those spaces to follow, but it's a simple thing. Now we've reached the final piece of the happens? The day will come when you 'll need the emergency fund. And it's happens, you'll be prepared. As I've already made clear, this is only for emergencies that were defined just a moment ago, OK? And as you build, you goals, like general investments, saving for specific things, and so right, you can start investing while building your emergency fund but there will always come a day when you'll need to spend your do? You're going to have to stop everything, aren't you ? All your goals. You can keep some partially funded, such as to offset the opportunity cost, but your priority will be to replenish the emergency fund to ensure because if it happened once, it can happen twice, and there are problems that even is to hit rock bottom due to negligence regarding what we discussed initially. So, if emergency fund, the first thing to do is to pay it back as soon as you can, common problem. What if I can't build an emergency fund because I don't have enough extra money? Do you have your normal job? Yes. You don't have much free time and you'd even like to have this extra income, but it's not possible and you don't know how. But that's that an extra income from part-time work, click on this video here where I'll take you through all the I hope you found this video helpful. See you next week, bye.