Emergency Fund

Posted By: Dr. Frugal in Budget on 06/07/2007 at 16:22:43

If you elect to neglect all of the other advice on this site, that's fine but please, for your own sake, listen to this one: Have an emergency fund. Once you have a budget outlined you will have a good feel for how much money is needed in an emergency fund. A well-developed emergency fund should be equal to about three months worth of expenses, or practically the time it takes to find a new job of equal pay. As an absolute bare minimum you should always have at least $400 socked away somewhere for quick access in case of an emergency and the banks are closed. I won't make suggestions as to where you should keep this money but if you have kids, well beyond where they can find it. This amount of money is not enough likely to pay your rent or mortgage but it's enough that if you absolutely had to leave your house you could live in a hotel for a couple of nights and not in your car. Maybe I'm biased since I live in hurricane country but you get the idea.

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