3 Things To Know About Emergency Savings

What do you need to know about building an emergency savings fund?

1.  How much do you need?

1. Start with 3-6 months’ worth of expenses
2. For example:
1. Your monthly expenses are $3,000
• Calculation:  6 months X $3,000 = $18,000

      2.  Build up to one year 

      3.  A couple of situations where it’s good to have more than one year's worth of expenses:

1. Someone in the household is self-employed
1. Your household is more exposed to what’s happening in the market
2. Household income tends to go up and down
2. Only one person in the household is earning money:
1. For example, a single parent
2. Household income is more vulnerable if that person loses their job

Take Action:

• Calculate how much money you need in emergency savings - what is the total needed for three to six months' worth of household expenses?
• Identify how much you would need to have in an emergency savings account with twelve months' worth of expenses.  That's your ultimate goal.

Copyright 2012    Connie Livingston                  All rights reserved