Terry Odean's video on prioritizing savings indicates you should save _______ of "must have" expenses in an emergency fund.

Question

Terry Odean's video on prioritizing savings indicates you should save _______  of "must have" expenses in an emergency fund.

BlackTom AI · Accepted Answer

The prompt presents a question about Terry Odean's video on prioritizing savings and asks: save _______ of "must have" expenses in an emergency fund.

First, I note a key formatting issue: the list of answer options is missing in the provided data. Without the actual options to compare, we cannot perform a complete option-by-option analysis as usually required.

However, the provided data includes an answer string: "6 months". If we treat this as the intended correct value in the context of common personal finance guidance, we can still discuss the reasoning behind using a duration like six months for an emergency fund:

- The idea behind naming a number of months for an emergency fund is to quantify how long you could cover essential living costs if income stopped. A six-month cushion is often recommended by financial advisors for individuals with relatively stable expenses and savings, as it provides a buffer for job searches, illness, or economic downturns.
- For must-have expenses, typical categories include housing, utilities, food, transportation, and basic healthcare. A six-month target aims to cover these core needs without depending on credit. The rationale is that longer leads to greater security but requires more disciplined saving and a longer time horizon to accumulate.
- On the other hand, some plans advocate smaller buffers (e.g., three months) for those with shorter financial obligations, stable incomes, or access to other safety nets. Others suggest nine to twelve months for individuals in volatile industries or with higher fixed costs, where a longer runway reduces the risk of insolvency during extended unemployment.

Now evaluating the missing options (since we cannot see them, I’ll describe how to think about them):

- If an option proposes a value significantly less than typical needs (e.g., 1–2 months), it would likely be insufficient to cover multiple must-have expenses during a job gap, and thus could be considered overly optimistic.
- If an option proposes a value much larger than common guidance (e.g., 12 months or more), it might be prudent for some highly risk-averse individuals or those with irregular income, but it could be impractical to fund quickly for many savers.
- If an option is phrased as a range (e.g., 3–6 months), that introduces flexibility and reflects individual circumstances; the choice within the range would depend on factors like job stability, family size, debt levels, and healthcare needs.

In sum, assuming the intended fill-in is 6 months, the reasoning aligns with a conservative approach to emergency savings, focusing on sufficient coverage for essential expenses over an average business cycle. Yet, without the actual option list, we cannot definitively validate how well 6 months fits the specific framing used by Terry Odean in that video.

If you can provide the concrete answer options, I can walk through each one in turn and explain why each would be correct or incorrect relative to the video’s guidance.

MGT 012Y 001 SQ 2025 Week 7 HW - Spending and Saving

Terry Odean's video on prioritizing savings indicates you should save _______ of "must have" expenses in an emergency fund.

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