How Much Will I Need in My Emergency Fund?
How much will I need in my emergency fund?
Most experts agree that you should have 3-6 months expenses set aside in an emergency fund. But exactly how do you figure what is considered an expense? Do you use your normal expense or do you cut back to the bare minimum?
First of all, if you fund your emergency fund with 6 months of your bare minimum expense, it should equal about 3-4 months of your normal expenses.
In my opinion the expenses that you should cover in your emergency fund are as follows: Food, house payment or rent, utilities, car payment, gas for car. You should also continue to set aside money for your car insurance, license plates any life insurance or health insurance policies you may have. Also if you homeowners insurance and property taxes are not included in your house payment then you should also set money aside for that. For most people this should total somewhere in the $2,000-$3,000 per month range. If you are sitting with $10,000-$15,000 in an emergency fund then you should be in pretty good shape.
The most important thing is that you have an emergency fund and it is an amount that you are comfortable with...and remember only use the emergency fund for EMERGENCIES.
- What is an emergency fund?
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