4. Calculating The Essentials

4. Calculating The Essentials

“Expect the best. Prepare for the worst. Capitalize on what comes.” Zig Ziglar

Before you become a millionaire, there are two more things you need to figure out first: Your emergency fund amount and how much debt you owe.

Like the previous numbers you go, once you have them, keep these numbers in mind! Again, you should probably be writing this down. It's also good stuff.

Step 5: Get your emergency fund amount

An emergency fund is exactly what it sounds like. It's for the eventual problems that you will come across like paying for an urgent medical bill, a car crash, or just extra cash to live on in case you're laid off.

And just as important, your emergency fund will also ensure that you can keep investing during life's rough patches so that you become a millionaire with or without luck.

Your emergency fund amount will depend on how much you spend month to month. Thankfully, your Personal Capital account calculates your recommended emergency fund amount number for you!

To get Personal Capital's recommended saving amount immediately, click here. To get there manually, head over to your Personal Capital dashboard, then to the "Planning" tab, and then click "Savings Planner":


Once you're there, you'll see a page like the one below. Feel free to browse the info on this page if you like, but head over to the "Emergency Fund" tab when you're done


Here you'll see exactly how much you need to save for your emergency fund:


As a reminder, the above screenshots were graciously donated by one of the alpha-testers—we'll call him "John"—and he'll showcase his progress as he goes through the guide.

In John's case, his recommended emergency fund is between $1,500 to $3,000 dollars. In the case that John loses his job, the lower end of these numbers ($1,500) will sustain John for about 3 months and the higher end ($3,000) for six months.

Semi-obviously, your recommended emergency fund amount for 3 to 6 months will be different. How much you choose to add to your emergency fund will depend on how comfortable you feel with your current financial situation.

If you have a stable job and aren't worried about suddenly being broke, you can stick with the lower end of the recommended saving amount. If you are prone to injury and/or don't have a stable source of income, it's recommended you aim for the bigger emergency fund amount.

And lastly, if you are still under your parents' care—becoming more and more common [1]—you can consider having no emergency fund. Of course, you should first ask your parents what they think before deciding to solely rely on them for your emergency fund!

Step 6: Figure out your debt

If you don't have any loans or mortgages, skip this step and continue to the
6. Prepping For The Apocalypse
6. Prepping For The Apocalypse

Your Net Worth becomes negative when you have more liabilities than assets. Liabilities are things that you owe money to (mortgages, credit card debt, student loans), while assets are things that you own (your own money, stocks, etc).

Debt is the number 1 reason that poor people fail to become rich [1]. When someone is in a lot of debt, they can't invest. And if they can't invest, they can't compound their money. And, remember: compounding money is the secret sauce to becoming rich.

To find out how much debt you are in, click the "Debt Paydown" tab to the right of your "Emergency Fund" tab. It looks like this:


If you don't see all of your loans and/or mortgages, you have to link them by clicking the "Link Account" (+) icon on the sidebar. If you have questions on how to do so, see the

page and then come back here once you have linked all your financial accounts.

Like for most things in this guide, don't worry about your amount of debt! You'll learn how to automatically get rid of it in the following pages. For now, just make sure you know these 4 things before going to the next page:

  1. Your average monthly income
  2. Your average monthly spending
  3. Your emergency fund amount
  4. And your total debt

If you have all four of these numbers, continue on to the next page.