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So How Much Is Enough?
While financial experts agree that an emergency fund is necessary, there’s no real agreement on how much is enough. Some experts advocate having at least a year’s salary saved, while others believe $1,000 is sufficient. Others say $2,000 to $3,000 is much more realis- tic than say $10,000. If you’ve got at least $5,000 in emergency money, it could more than likely pay the mortgage for three months or so plus some other necessities. Perhaps the best goal to shoot for is to have three to six months of income saved as an emergency reserve.
What’s important is to consider what works for you under the current circumstances you’re in. Take a good look at your income and your needs and land on a monthly figure you can stash in an emergency fund. It can be as simple as depositing $50 to $100 into your savings account. But before you begin, be sure that you’re meeting your basic living expenses. And as you build your emergency fund, be sure you’re also reducing your spending and avoiding debt.
It’s also a good idea to keep your emergency money in an account that’s not too easy to access. You might consider opening an account at a
Saving For Emergencies, Periodic Payments, and Financial Goals